81_FR_55411 81 FR 55251 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Adopt a New Fee in Section V (Technology Fees) of the BOX Fee Schedule

81 FR 55251 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Adopt a New Fee in Section V (Technology Fees) of the BOX Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 160 (August 18, 2016)

Page Range55251-55254
FR Document2016-19687

Federal Register, Volume 81 Issue 160 (Thursday, August 18, 2016)
[Federal Register Volume 81, Number 160 (Thursday, August 18, 2016)]
[Notices]
[Pages 55251-55254]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-19687]



[[Page 55251]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78565; File No. SR-BOX-2016-40]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Its Fee Schedule To Adopt a New Fee in Section V (Technology 
Fees) of the BOX Fee Schedule

August 12, 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 August 3, 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.
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    \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).
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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 
adopt a new fee in Section V (Technology Fees) of the BOX Fee Schedule 
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 amend Section V (Technology Fees) in the 
Fee Schedule. Specifically, the Exchange proposes to establish Section 
V.B. (High Speed Vendor Feed (``HSVF'') in the BOX Fee Schedule and 
adopt a fee of $750.00 per month for all market participants for 
receiving the HSVF. This fee will be payable by any market participant 
that receives the HSVF through a direct connection to BOX and will be 
assessed once per market participant.
    In February 2013, the Exchange made its proprietary direct market 
data product, the HSVF, available to all market participants at no 
cost.\5\ The BOX HSVF is a proprietary product that provides: (i) 
Trades and trade cancelation information; (ii) best-ranked price level 
to buy and the best-ranked price level to sell; (iii) instrument 
summaries (including information such as high, low, and last trade 
price and traded volume); (iv) the five best limit prices for each 
option instrument; (v) request for Quote messages; \6\ (vi) PIP Order, 
Improvement Order and Block Trade Order (Facilitation and Solicitation) 
information; \7\ (vii) orders exposed at NBBO; \8\ (viii) instrument 
dictionary (e.g., strike price, expiration date, underlying symbol, 
price threshold, and minimum trading increment for instruments traded 
on BOX); (ix) options class and instrument status change notices (e.g., 
whether an instrument or class is in pre-opening, continuous trading, 
closed, halted, or prohibited from trading); and (x) options class 
opening time.
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    \5\ See Securities Exchange Act Release No. 68833 (February 5, 
2013), 78 FR 9758 (February 11, 2013) (SR-BOX-2013-04).
    \6\ See Exchange Rules 100(a)(57), 7070(h) and 8050.
    \7\ As set forth in Exchange Rules 7150 and 7270, respectively.
    \8\ As set forth in Exchange Rules 7130(b)(3) and 8040(d)(6), 
respectively.
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    The Exchange notes that data connection fees are charged by other 
options markets such as International Securities Exchange (``ISE''), 
Bats BZX Exchange (``BATS''), Chicago Board Options Exchange 
(``CBOE''), The NASDAQ Options Market (``NOM''), Miami International 
Securities Exchange LLC (``MIAX''), NASDAQ BX, Inc. (``BX''), and 
NASDAQ PHLX LLC (``Phlx'').\9\
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    \9\ See the ISE Fee Schedule, available at: https://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf, the 
BATS Fee Schedule, available at: https://batstrading.com/support/fee_schedule/bzx/, the CBOE Fee Schedule, available at https://www.cboe.org/framed/pdfframed.aspx?content=/publish/mdxfees/mdxfeescheduleforcboedatafeeds.pdf§ion=SEC_MDX_CSM&title=CBOE 
MDX Fees Schedule; the NOM Fee Schedule, available at http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing, the MIAX Fee 
Schedule, available at: https://www.miaxoptions.com/content/fees and 
the Phlx Fee Schedule, available at: http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\10\ in general, and Section 
6(b)(4) and (5) of the Act,\11\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees, and other charges 
among BOX Participants and other persons using the Exchange's 
facilities and is not designed to permit unfair discrimination among 
them.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public.
    The Commission concluded that Regulation NMS--by deregulating the 
market in proprietary data--would itself further the Act's goals of 
facilitating efficiency and competition:

    [E]fficiency is promoted when broker-dealers who do not need the 
data beyond the prices, sizes, market center identifications of the 
NBBO and consolidated last sale information are not required to 
receive (and pay for) such data. The Commission also believes that 
efficiency is promoted when broker-dealers may choose to receive 
(and pay for) additional market data based on their own internal 
analysis of the need for such data.\12\
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    \12\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
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    By removing ``unnecessary regulatory restrictions'' on the ability 
of exchanges to sell their own data, Regulation NMS advanced the goals 
of the Act and the principles reflected in its legislative history. If 
the free market should determine whether proprietary data is sold to 
broker-dealers at all, it follows that the price at which such data is 
sold should be set by the market as well. The HSVF is precisely the 
sort of market data product that the Commission envisioned when it 
adopted Regulation NMS.
    The decision of the United States Court of Appeals for the District 
of

[[Page 55252]]

Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010) 
(``NetCoalition I''), upheld the Commission's reliance upon competitive 
markets to set reasonable and equitably allocated fees for market data. 
``In fact, the legislative history indicates that the Congress intended 
that the market system `evolve through the interplay of competitive 
forces as unnecessary regulatory restrictions are removed' and that the 
SEC wield its regulatory power `in those situations where competition 
may not be sufficient,' such as in the creation of a `consolidated 
transactional reporting system.' NetCoalition I, at 535 (quoting H.R. 
Rep. No. 94-229, at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 321, 
323). The court agreed with the Commission's conclusion that ``Congress 
intended that `competitive forces should dictate the services and 
practices that constitute the U.S. national market system for trading 
equity securities.' \13\
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    \13\ NetCoalition I, at 535.
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    The Court in NetCoalition I, while upholding the Commission's 
conclusion that competitive forces may be relied upon to establish the 
fairness of prices, nevertheless concluded that the record in that case 
did not adequately support the Commission's conclusions as to the 
competitive nature of the market for NYSE Arca's data product at issue 
in that case. As explained below in BOX's Statement on Burden on 
Competition, however, BOX believes that there is substantial evidence 
of competition in the marketplace for data that was not in the record 
in the NetCoalition I case, and that the Commission is entitled to rely 
upon such evidence in concluding fees are the product of competition, 
and therefore in accordance with the relevant statutory standards.\14\ 
Accordingly, any findings of the court with respect to that product may 
not be relevant to the product at issue in this filing.
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    \14\ It should also be noted that Section 916 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank 
Act'') has amended paragraph (A) of Section 19(b)(3) of the Act, 15 
U.S.C. 78s(b)(3), to make it clear that all exchange fees, including 
fees for market data, may be filed by exchanges.
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    BOX believes that the allocation of the proposed fee is fair and 
equitable in accordance with Section 6(b)(4) of the Act, and not 
unreasonably discriminatory in accordance with Section 6(b)(5) of the 
Act. As described above, the proposed fee is based on pricing 
conventions and distinctions that exist in BOX's current fee schedule. 
These distinctions are each based on principles of fairness and equity 
that have helped for many years to maintain fair, equitable, and not 
unreasonably discriminatory fees, and that apply with equal or greater 
force to the current proposal.
    As described in greater detail below, if BOX has calculated 
improperly and the market deems the proposed fees to be unfair, 
inequitable, or unreasonably discriminatory, firms can discontinue the 
use of their data because the proposed product is entirely optional to 
all parties. Firms are not required to purchase data and BOX is not 
required to make data available or to offer specific pricing 
alternatives for potential purchases. BOX can discontinue offering a 
pricing alternative (as it has in the past) and firms can discontinue 
their use at any time and for any reason (as they often do), including 
due to their assessment of the reasonableness of fees charged. BOX 
continues to establish and revise pricing policies aimed at increasing 
fairness and equitable allocation of fees among subscribers.
    The Exchange's proprietary HSVF is currently available to all 
market participants at no cost; however, the Exchange now proposes to 
adopt a new fee of $750.00 per month for all market participants who 
receive the HSVF. The Exchange believes that adopting such a fee is 
reasonable and appropriate as it is within the range that is charged by 
other options exchanges.\15\
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    \15\ See supra, note 9. CBOE's data distributor MDX charges a 
$500 port fee per month; NOM charges a port fee between $500 and 
$750 a month depending on the port. The Exchange notes the CBOE and 
NOM charge these fees per port, while the Exchange proposes to 
assess the fee once per market participant.
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    In addition, the Exchange believes that its fees are equitable and 
not unfairly discriminatory because all market participants are charged 
the same fee for access to the HSVF. Further, the Exchange notes that 
all market participants who wish to receive the feed may, as the feed 
is available to anyone willing to pay the proposed $750 monthly fee.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
change to the Fee Schedule will simply allow the Exchange to charge all 
market participants equally for the costs incurred by connecting to the 
BOX Network. The HSVF is similar to proprietary data products currently 
offered by other exchanges, and these other exchanges charge comparable 
monthly fees.\16\ While connection to the HSVF is required to receive 
the broadcasts for and participate in the Exchange's auction 
mechanisms,\17\ the Exchange does not believes the proposed monthly fee 
will impede competition within these auctions. As discussed above, the 
Exchange believes that fees for connectivity are constrained by the 
robust competition for order flow among exchanges and non-exchange 
markets. Further, excessive fees for connectivity would serve to impair 
ability to compete for order flow rather than burdening competition. As 
such, 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.
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    \16\ See supra note 9.
    \17\ BOX's auction mechanisms include the Price Improvement 
Period (``PIP''), Complex Order Price Improvement Period 
(``COPIP''), Facilitation Auction and Solicitation Auction.
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    Notwithstanding its determination that the Commission may rely upon 
competition to establish fair and equitably allocated fees for market 
data, the NetCoalition court found that the Commission had not, in that 
case, compiled a record that adequately supported its conclusion that 
the market for the data at issue in the case was competitive. BOX 
believes that a record may readily be established to demonstrate the 
competitive nature of the market in question.
    There is intense competition between trading platforms that provide 
transaction execution and routing services and proprietary data 
products. Transaction execution and proprietary data products are 
complementary in that market data is both an input and a byproduct of 
the execution service. In fact, market data and trade execution are a 
paradigmatic example of joint products with joint costs. Data products 
are valuable to many end subscribers only insofar as they provide 
information that end Subscribers expect will assist them or their 
customers in making trading decisions.
    The costs of producing market data include not only the costs of 
the data distribution infrastructure, but also the costs of designing, 
maintaining, and operating the exchange's transaction execution 
platform and the cost of regulating the exchange to ensure its fair 
operation and maintain investor confidence. The total return that a 
trading platform earns reflects the revenues it receives from both 
products and the joint costs it incurs. Moreover, an exchange's 
Participant's view the

[[Page 55253]]

costs of transaction executions and of data as a unified cost of doing 
business with the exchange. A broker-dealer (``BD'') will direct orders 
to a particular exchange only if the expected revenues from executing 
trades on the exchange exceed net transaction execution costs and the 
cost of data that the BD chooses to buy to support its trading 
decisions (or those of its customers). The choice of data products is, 
in turn, a product of the value of the products in making profitable 
trading decisions. If the cost of the product exceeds its expected 
value, the BD will choose not to buy it. Moreover, as a BD chooses to 
direct fewer orders to a particular exchange, the value of the product 
to that BD decreases, for two reasons. First, the product will contain 
less information, because executions of the BD's orders will not be 
reflected in it. Second, and perhaps more important, the product will 
be less valuable to that BD because it does not provide information 
about the venue to which it is directing its orders. Data from the 
competing venue to which the BD is directing orders will become 
correspondingly more valuable.
    Thus, an increase in the fees charged for either transactions or 
data has the potential to impair revenues from both products. ``No one 
disputes that competition for order flow is `fierce'.'' NetCoalition at 
24. However, the existence of fierce competition for order flow implies 
a high degree of price sensitivity on the part of BDs with order flow, 
since they may readily reduce costs by directing orders toward the 
lowest-cost trading venues. A BD that shifted its order flow from one 
platform to another in response to order execution price differentials 
would both reduce the value of that platform's market data and reduce 
its own need to consume data from the disfavored platform. Similarly, 
if a platform increases its market data fees, the change will affect 
the overall cost of doing business with the platform, and affected BDs 
will assess whether they can lower their trading costs by directing 
orders elsewhere and thereby lessening the need for the more expensive 
data.
    Analyzing the cost of market data distribution in isolation from 
the cost of all of the inputs supporting the creation of market data 
will inevitably underestimate the cost of the data. Thus, because it is 
impossible to create data without a fast, technologically robust, and 
well-regulated execution system, system costs and regulatory costs 
affect the price of market data. It would be equally misleading, 
however, to attribute all of the exchange's costs to the market data 
portion of an exchange's joint product. Rather, all of the exchange's 
costs are incurred for the unified purposes of attracting order flow, 
executing and/or routing orders, and generating and selling data about 
market activity. The total return that an exchange earns reflects the 
revenues it receives from the joint products and the total costs of the 
joint products.
    Competition among trading platforms can be expected to constrain 
the aggregate return each platform earns from the sale of its joint 
products, but different platforms may choose from a range of possible, 
and equally reasonable, pricing strategies as the means of recovering 
total costs. Some exchanges pays rebates to attract orders, charges 
relatively low prices for market information and charges relatively 
high prices for accessing posted liquidity. Other platforms may choose 
a strategy of paying lower liquidity rebates to attract orders, setting 
relatively low prices for accessing posted liquidity, and setting 
relatively high prices for market information. Still others may provide 
most data free of charge and rely exclusively on transaction fees to 
recover their costs. Finally, some platforms may incentivize use by 
providing opportunities for equity ownership, which may allow them to 
charge lower direct fees for executions and data.
    In this environment, there is no economic basis for regulating 
maximum prices for one of the joint products in an industry in which 
suppliers face competitive constraints with regard to the joint 
offering. Such regulation is unnecessary because an ``excessive'' price 
for one of the joint products will ultimately have to be reflected in 
lower prices for other products sold by the firm, or otherwise the firm 
will experience a loss in the volume of its sales that will be adverse 
to its overall profitability. In other words, an increase in the price 
of data will ultimately have to be accompanied by a decrease in the 
cost of executions, or the volume of both data and executions will 
fall.
    The level of competition and contestability in the market is 
evident in the numerous alternative venues that compete for order flow, 
including eleven SRO markets, as well as internalizing BDs and various 
forms of alternative trading systems (``ATSs''), including dark pools 
and electronic communication networks (``ECNs''). Each SRO market 
competes to produce transaction reports via trade executions, and two 
FINRA-regulated TRFs compete to attract internalized transaction 
reports. It is common for BDs to further and exploit this competition 
by sending their order flow and transaction reports to multiple 
markets, rather than providing them all to a single market. Competitive 
markets for order flow, executions, and transaction reports provide 
pricing discipline for the inputs of proprietary data products.
    The large number of SROs, TRFs, BDs, and ATSs that currently 
produce proprietary data or are currently capable of producing it 
provides further pricing discipline for proprietary data products. Each 
SRO, TRF, ATS, and BD is currently permitted to produce proprietary 
data products, and many currently do or have announced plans to do so, 
including BOX, NYSE, NYSE MKT, NYSE Arca, and BATS/Direct Edge.
    Any ATS or BD can combine with any other ATS, BD, or multiple ATSs 
or BDs to produce joint proprietary data products. Additionally, order 
routers and market data vendors can facilitate single or multiple BDs' 
production of proprietary data products. The potential sources of 
proprietary products are virtually limitless. Notably, the potential 
sources of data include the BDs that submit trade reports to TRFs and 
that have the ability to consolidate and distribute their data without 
the involvement of FINRA or an exchange-operated TRF.
    The fact that proprietary data from ATSs, BDs, and vendors can by-
pass SROs is significant in two respects. First, non-SROs can compete 
directly with SROs for the production and sale of proprietary data 
products, as BATS and NYSE Arca did before registering as exchanges by 
publishing proprietary book data on the internet. Second, because a 
single order or transaction report can appear in a core data product, a 
SRO proprietary product, and/or a non-SRO proprietary product, the data 
available in proprietary products is exponentially greater than the 
actual number of orders and transaction reports that exist in the 
marketplace.
    In addition to the competition and price discipline described 
above, the market for proprietary data products is also highly 
contestable because market entry is rapid, inexpensive, and profitable. 
The history of electronic trading is replete with examples of entrants 
that swiftly grew into some of the largest electronic trading platforms 
and proprietary data producers: Archipelago, Bloomberg Tradebook, 
Island, RediBook, Attain, TracECN, BATS Trading and BATS/Direct Edge. A 
proliferation of dark pools and other ATSs operate profitably with 
fragmentary shares of consolidated market volume.
    Regulation NMS, by deregulating the market for proprietary data, 
has

[[Page 55254]]

increased the contestability of that market. While BDs have previously 
published their proprietary data individually, Regulation NMS 
encourages market data vendors and BDs to produce proprietary products 
cooperatively in a manner never before possible. Multiple market data 
vendors already have the capability to aggregate data and disseminate 
it on a profitable scale, including Bloomberg and Thomson Reuters. In 
Europe, Cinnober aggregates and disseminates data from over 40 brokers 
and multilateral trading facilities.\18\
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    \18\ See http://www.cinnober.com/boat-trade-reporting.
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    In this environment, a super-competitive increase in the fees 
charged for either transactions or data has the potential to impair 
revenues from both products. ``No one disputes that competition for 
order flow is `fierce'.'' NetCoalition I at 539. The existence of 
fierce competition for order flow implies a high degree of price 
sensitivity on the part of BDs with order flow, since they may readily 
reduce costs by directing orders toward the lowest-cost trading venues. 
A BD that shifted its order flow from one platform to another in 
response to order execution price differentials would both reduce the 
value of that platform's market data and reduce its own need to consume 
data from the disfavored platform. If a platform increases its market 
data fees, the change will affect the overall cost of doing business 
with the platform, and affected BDs will assess whether they can lower 
their trading costs by directing orders elsewhere and thereby lessening 
the need for the more expensive data.

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 \19\ and Rule 19b-4(f)(2) 
thereunder,\20\ because it establishes or changes a due, or fee.
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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic 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-2016-40 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-2016-40. 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-2016-40, and should be 
submitted on or before September 8, 2016.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19687 Filed 8-17-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 81, No. 160 / Thursday, August 18, 2016 / Notices                                                   55251

                                               SECURITIES AND EXCHANGE                                  forth in Sections A, B, and C below, of               Inc. (‘‘BX’’), and NASDAQ PHLX LLC
                                               COMMISSION                                               the most significant aspects of such                  (‘‘Phlx’’).9
                                                                                                        statements.
                                               [Release No. 34–78565; File No. SR–BOX–                                                                        2. Statutory Basis
                                               2016–40]                                                 A. Self-Regulatory Organization’s                        The Exchange believes that the
                                                                                                        Statement of the Purpose of, and                      proposal is consistent with the
                                               Self-Regulatory Organizations; BOX                       Statutory Basis for, the Proposed Rule                requirements of Section 6(b) of the
                                               Options Exchange LLC; Notice of                          Change                                                Act,10 in general, and Section 6(b)(4)
                                               Filing and Immediate Effectiveness of
                                               a Proposed Rule Change To Amend Its                      1. Purpose                                            and (5) of the Act,11 in particular, in that
                                               Fee Schedule To Adopt a New Fee in                                                                             it provides for the equitable allocation
                                                                                                           The Exchange proposes to amend                     of reasonable dues, fees, and other
                                               Section V (Technology Fees) of the                       Section V (Technology Fees) in the Fee
                                               BOX Fee Schedule                                                                                               charges among BOX Participants and
                                                                                                        Schedule. Specifically, the Exchange                  other persons using the Exchange’s
                                               August 12, 2016.
                                                                                                        proposes to establish Section V.B. (High              facilities and is not designed to permit
                                                                                                        Speed Vendor Feed (‘‘HSVF’’) in the                   unfair discrimination among them.
                                                  Pursuant to Section 19(b)(1) of the
                                                                                                        BOX Fee Schedule and adopt a fee of                      In adopting Regulation NMS, the
                                               Securities Exchange Act of 1934 (the
                                                                                                        $750.00 per month for all market                      Commission granted self-regulatory
                                               ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                                                                        participants for receiving the HSVF.                  organizations and broker-dealers
                                               notice is hereby given that on August 3,
                                                                                                        This fee will be payable by any market                increased authority and flexibility to
                                               2016, BOX Options Exchange LLC (the
                                                                                                        participant that receives the HSVF                    offer new and unique market data to the
                                               ‘‘Exchange’’) filed with the Securities
                                                                                                        through a direct connection to BOX and                public.
                                               and Exchange Commission
                                                                                                        will be assessed once per market                         The Commission concluded that
                                               (‘‘Commission’’) the proposed rule
                                                                                                        participant.                                          Regulation NMS—by deregulating the
                                               change as described in Items I, II, and
                                                                                                           In February 2013, the Exchange made                market in proprietary data—would itself
                                               III below, which Items have been
                                                                                                        its proprietary direct market data                    further the Act’s goals of facilitating
                                               prepared by the Exchange. The
                                                                                                        product, the HSVF, available to all                   efficiency and competition:
                                               Exchange filed the proposed rule change
                                                                                                        market participants at no cost.5 The
                                               pursuant to Section 19(b)(3)(A)(ii) of the                                                                       [E]fficiency is promoted when broker-
                                                                                                        BOX HSVF is a proprietary product that                dealers who do not need the data beyond the
                                               Act,3 and Rule 19b–4(f)(2) thereunder,4
                                                                                                        provides: (i) Trades and trade                        prices, sizes, market center identifications of
                                               which renders the proposal effective
                                                                                                        cancelation information; (ii) best-ranked             the NBBO and consolidated last sale
                                               upon filing with the Commission. The
                                                                                                        price level to buy and the best-ranked                information are not required to receive (and
                                               Commission is publishing this notice to                                                                        pay for) such data. The Commission also
                                                                                                        price level to sell; (iii) instrument
                                               solicit comments on the proposed rule                                                                          believes that efficiency is promoted when
                                                                                                        summaries (including information such
                                               change from interested persons.                                                                                broker-dealers may choose to receive (and
                                                                                                        as high, low, and last trade price and
                                                                                                                                                              pay for) additional market data based on their
                                               I. Self-Regulatory Organization’s                        traded volume); (iv) the five best limit              own internal analysis of the need for such
                                               Statement of the Terms of the Substance                  prices for each option instrument; (v)                data.12
                                               of the Proposed Rule Change                              request for Quote messages; 6 (vi) PIP                  By removing ‘‘unnecessary regulatory
                                                  The Exchange is filing with the                       Order, Improvement Order and Block                    restrictions’’ on the ability of exchanges
                                               Securities and Exchange Commission                       Trade Order (Facilitation and                         to sell their own data, Regulation NMS
                                               (‘‘Commission’’) a proposed rule change                  Solicitation) information; 7 (vii) orders             advanced the goals of the Act and the
                                               to amend the Fee Schedule to adopt a                     exposed at NBBO; 8 (viii) instrument                  principles reflected in its legislative
                                               new fee in Section V (Technology Fees)                   dictionary (e.g., strike price, expiration            history. If the free market should
                                               of the BOX Fee Schedule on the BOX                       date, underlying symbol, price                        determine whether proprietary data is
                                               Market LLC (‘‘BOX’’) options facility.                   threshold, and minimum trading                        sold to broker-dealers at all, it follows
                                               The text of the proposed rule change is                  increment for instruments traded on                   that the price at which such data is sold
                                               available from the principal office of the               BOX); (ix) options class and instrument               should be set by the market as well. The
                                               Exchange, at the Commission’s Public                     status change notices (e.g., whether an               HSVF is precisely the sort of market
                                               Reference Room and also on the                           instrument or class is in pre-opening,                data product that the Commission
                                               Exchange’s Internet Web site at http://                  continuous trading, closed, halted, or                envisioned when it adopted Regulation
                                               boxexchange.com.                                         prohibited from trading); and (x) options             NMS.
                                                                                                        class opening time.                                     The decision of the United States
                                               II. Self-Regulatory Organization’s                          The Exchange notes that data                       Court of Appeals for the District of
                                               Statement of the Purpose of, and                         connection fees are charged by other
                                               Statutory Basis for, the Proposed Rule                   options markets such as International                    9 See the ISE Fee Schedule, available at: https://
                                               Change                                                   Securities Exchange (‘‘ISE’’), Bats BZX               www.ise.com/assets/documents/OptionsExchange/
                                                                                                        Exchange (‘‘BATS’’), Chicago Board                    legal/fee/ISE_fee_schedule.pdf, the BATS Fee
                                                  In its filing with the Commission, the                                                                      Schedule, available at: https://batstrading.com/
                                               Exchange included statements                             Options Exchange (‘‘CBOE’’), The                      support/fee_schedule/bzx/, the CBOE Fee Schedule,
                                               concerning the purpose of and basis for                  NASDAQ Options Market (‘‘NOM’’),                      available at https://www.cboe.org/framed/
                                               the proposed rule change and discussed                   Miami International Securities                        pdfframed.aspx?content=/publish/mdxfees/mdxfee
                                                                                                        Exchange LLC (‘‘MIAX’’), NASDAQ BX,                   scheduleforcboedatafeeds.pdf&section=SEC_MDX_
                                               any comments it received on the                                                                                CSM&title=CBOE MDX Fees Schedule; the NOM
                                               proposed rule change. The text of these                                                                        Fee Schedule, available at http://
                                               statements may be examined at the                          5 See Securities Exchange Act Release No. 68833     www.nasdaqtrader.com/Micro.aspx?id=
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                                               places specified in Item IV below. The                   (February 5, 2013), 78 FR 9758 (February 11, 2013)    optionsPricing, the MIAX Fee Schedule, available
                                                                                                        (SR–BOX–2013–04).                                     at: https://www.miaxoptions.com/content/fees and
                                               Exchange has prepared summaries, set                       6 See Exchange Rules 100(a)(57), 7070(h) and        the Phlx Fee Schedule, available at: http://
                                                                                                        8050.                                                 www.nasdaqtrader.com/Micro.aspx?id=phlxpricing.
                                                 1 15 U.S.C. 78s(b)(1).                                   7 As set forth in Exchange Rules 7150 and 7270,        10 15 U.S.C. 78f(b).
                                                 2 17 CFR 240.19b–4.                                    respectively.                                            11 15 U.S.C. 78f(b)(4) and (5).
                                                 3 15 U.S.C. 78s(b)(3)(A)(ii).                            8 As set forth in Exchange Rules 7130(b)(3) and        12 See Securities Exchange Act Release No. 51808
                                                 4 17 CFR 240.19b–4(f)(2).                              8040(d)(6), respectively.                             (June 9, 2005), 70 FR 37496 (June 29, 2005).



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                                               55252                          Federal Register / Vol. 81, No. 160 / Thursday, August 18, 2016 / Notices

                                               Columbia Circuit in NetCoalition v.                        have helped for many years to maintain                monthly fees.16 While connection to the
                                               SEC, 615 F.3d 525 (D.C. Cir. 2010)                         fair, equitable, and not unreasonably                 HSVF is required to receive the
                                               (‘‘NetCoalition I’’), upheld the                           discriminatory fees, and that apply with              broadcasts for and participate in the
                                               Commission’s reliance upon                                 equal or greater force to the current                 Exchange’s auction mechanisms,17 the
                                               competitive markets to set reasonable                      proposal.                                             Exchange does not believes the
                                               and equitably allocated fees for market                       As described in greater detail below,              proposed monthly fee will impede
                                               data. ‘‘In fact, the legislative history                   if BOX has calculated improperly and                  competition within these auctions. As
                                               indicates that the Congress intended                       the market deems the proposed fees to                 discussed above, the Exchange believes
                                               that the market system ‘evolve through                     be unfair, inequitable, or unreasonably               that fees for connectivity are
                                               the interplay of competitive forces as                     discriminatory, firms can discontinue                 constrained by the robust competition
                                               unnecessary regulatory restrictions are                    the use of their data because the                     for order flow among exchanges and
                                               removed’ and that the SEC wield its                        proposed product is entirely optional to              non-exchange markets. Further,
                                               regulatory power ‘in those situations                      all parties. Firms are not required to                excessive fees for connectivity would
                                               where competition may not be                               purchase data and BOX is not required                 serve to impair ability to compete for
                                               sufficient,’ such as in the creation of a                  to make data available or to offer                    order flow rather than burdening
                                               ‘consolidated transactional reporting                      specific pricing alternatives for potential           competition. As such, the Exchange
                                               system.’ NetCoalition I, at 535 (quoting                   purchases. BOX can discontinue                        does not believe that the proposed rule
                                               H.R. Rep. No. 94–229, at 92 (1975), as                     offering a pricing alternative (as it has             change will impose any burden on
                                               reprinted in 1975 U.S.C.C.A.N. 321,                        in the past) and firms can discontinue                competition not necessary or
                                               323). The court agreed with the                            their use at any time and for any reason              appropriate in furtherance of the
                                               Commission’s conclusion that                               (as they often do), including due to their            purposes of the Act.
                                               ‘‘Congress intended that ‘competitive                      assessment of the reasonableness of fees                 Notwithstanding its determination
                                               forces should dictate the services and                     charged. BOX continues to establish and               that the Commission may rely upon
                                               practices that constitute the U.S.                         revise pricing policies aimed at                      competition to establish fair and
                                               national market system for trading                         increasing fairness and equitable                     equitably allocated fees for market data,
                                               equity securities.’ 13                                     allocation of fees among subscribers.                 the NetCoalition court found that the
                                                  The Court in NetCoalition I, while                         The Exchange’s proprietary HSVF is                 Commission had not, in that case,
                                               upholding the Commission’s conclusion                      currently available to all market                     compiled a record that adequately
                                               that competitive forces may be relied                      participants at no cost; however, the                 supported its conclusion that the market
                                               upon to establish the fairness of prices,                  Exchange now proposes to adopt a new                  for the data at issue in the case was
                                               nevertheless concluded that the record                     fee of $750.00 per month for all market               competitive. BOX believes that a record
                                               in that case did not adequately support                    participants who receive the HSVF. The                may readily be established to
                                               the Commission’s conclusions as to the                     Exchange believes that adopting such a                demonstrate the competitive nature of
                                               competitive nature of the market for                       fee is reasonable and appropriate as it is            the market in question.
                                               NYSE Arca’s data product at issue in                       within the range that is charged by other                There is intense competition between
                                               that case. As explained below in BOX’s                     options exchanges.15                                  trading platforms that provide
                                               Statement on Burden on Competition,                           In addition, the Exchange believes                 transaction execution and routing
                                               however, BOX believes that there is                        that its fees are equitable and not                   services and proprietary data products.
                                               substantial evidence of competition in                     unfairly discriminatory because all                   Transaction execution and proprietary
                                               the marketplace for data that was not in                   market participants are charged the                   data products are complementary in that
                                               the record in the NetCoalition I case,                     same fee for access to the HSVF.                      market data is both an input and a
                                               and that the Commission is entitled to                     Further, the Exchange notes that all                  byproduct of the execution service. In
                                               rely upon such evidence in concluding                      market participants who wish to receive               fact, market data and trade execution are
                                               fees are the product of competition, and                   the feed may, as the feed is available to             a paradigmatic example of joint
                                               therefore in accordance with the                           anyone willing to pay the proposed                    products with joint costs. Data products
                                               relevant statutory standards.14                            $750 monthly fee.                                     are valuable to many end subscribers
                                               Accordingly, any findings of the court                                                                           only insofar as they provide information
                                                                                                          B. Self-Regulatory Organization’s
                                               with respect to that product may not be                                                                          that end Subscribers expect will assist
                                                                                                          Statement on Burden on Competition
                                               relevant to the product at issue in this                                                                         them or their customers in making
                                               filing.                                                      The Exchange does not believe that
                                                                                                                                                                trading decisions.
                                                  BOX believes that the allocation of the                 the proposed rule change will result in
                                                                                                                                                                   The costs of producing market data
                                               proposed fee is fair and equitable in                      any burden on competition that is not
                                                                                                                                                                include not only the costs of the data
                                               accordance with Section 6(b)(4) of the                     necessary or appropriate in furtherance
                                                                                                                                                                distribution infrastructure, but also the
                                               Act, and not unreasonably                                  of the purposes of the Act. The
                                                                                                                                                                costs of designing, maintaining, and
                                               discriminatory in accordance with                          proposed change to the Fee Schedule
                                                                                                                                                                operating the exchange’s transaction
                                               Section 6(b)(5) of the Act. As described                   will simply allow the Exchange to
                                                                                                                                                                execution platform and the cost of
                                               above, the proposed fee is based on                        charge all market participants equally
                                                                                                                                                                regulating the exchange to ensure its fair
                                               pricing conventions and distinctions                       for the costs incurred by connecting to
                                                                                                                                                                operation and maintain investor
                                               that exist in BOX’s current fee schedule.                  the BOX Network. The HSVF is similar
                                                                                                                                                                confidence. The total return that a
                                               These distinctions are each based on                       to proprietary data products currently
                                                                                                                                                                trading platform earns reflects the
                                               principles of fairness and equity that                     offered by other exchanges, and these
                                                                                                                                                                revenues it receives from both products
                                                                                                          other exchanges charge comparable
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                                                 13 NetCoalition
                                                                                                                                                                and the joint costs it incurs. Moreover,
                                                                 I, at 535.
                                                 14 Itshould also be noted that Section 916 of the          15 See supra, note 9. CBOE’s data distributor MDX   an exchange’s Participant’s view the
                                               Dodd-Frank Wall Street Reform and Consumer                 charges a $500 port fee per month; NOM charges
                                                                                                                                                                  16 Seesupra note 9.
                                               Protection Act of 2010 (‘‘Dodd-Frank Act’’) has            a port fee between $500 and $750 a month
                                               amended paragraph (A) of Section 19(b)(3) of the           depending on the port. The Exchange notes the           17 BOX’sauction mechanisms include the Price
                                               Act, 15 U.S.C. 78s(b)(3), to make it clear that all        CBOE and NOM charge these fees per port, while        Improvement Period (‘‘PIP’’), Complex Order Price
                                               exchange fees, including fees for market data, may         the Exchange proposes to assess the fee once per      Improvement Period (‘‘COPIP’’), Facilitation
                                               be filed by exchanges.                                     market participant.                                   Auction and Solicitation Auction.



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                                                                           Federal Register / Vol. 81, No. 160 / Thursday, August 18, 2016 / Notices                                          55253

                                               costs of transaction executions and of                  joint product. Rather, all of the                     to multiple markets, rather than
                                               data as a unified cost of doing business                exchange’s costs are incurred for the                 providing them all to a single market.
                                               with the exchange. A broker-dealer                      unified purposes of attracting order                  Competitive markets for order flow,
                                               (‘‘BD’’) will direct orders to a particular             flow, executing and/or routing orders,                executions, and transaction reports
                                               exchange only if the expected revenues                  and generating and selling data about                 provide pricing discipline for the inputs
                                               from executing trades on the exchange                   market activity. The total return that an             of proprietary data products.
                                               exceed net transaction execution costs                  exchange earns reflects the revenues it                  The large number of SROs, TRFs, BDs,
                                               and the cost of data that the BD chooses                receives from the joint products and the              and ATSs that currently produce
                                               to buy to support its trading decisions                 total costs of the joint products.                    proprietary data or are currently capable
                                               (or those of its customers). The choice                    Competition among trading platforms                of producing it provides further pricing
                                               of data products is, in turn, a product of              can be expected to constrain the                      discipline for proprietary data products.
                                               the value of the products in making                     aggregate return each platform earns                  Each SRO, TRF, ATS, and BD is
                                               profitable trading decisions. If the cost               from the sale of its joint products, but              currently permitted to produce
                                               of the product exceeds its expected                     different platforms may choose from a                 proprietary data products, and many
                                               value, the BD will choose not to buy it.                range of possible, and equally                        currently do or have announced plans to
                                               Moreover, as a BD chooses to direct                     reasonable, pricing strategies as the                 do so, including BOX, NYSE, NYSE
                                               fewer orders to a particular exchange,                  means of recovering total costs. Some                 MKT, NYSE Arca, and BATS/Direct
                                               the value of the product to that BD                     exchanges pays rebates to attract orders,             Edge.
                                               decreases, for two reasons. First, the                  charges relatively low prices for market                 Any ATS or BD can combine with any
                                               product will contain less information,                  information and charges relatively high               other ATS, BD, or multiple ATSs or BDs
                                               because executions of the BD’s orders                   prices for accessing posted liquidity.                to produce joint proprietary data
                                               will not be reflected in it. Second, and                Other platforms may choose a strategy                 products. Additionally, order routers
                                               perhaps more important, the product                     of paying lower liquidity rebates to                  and market data vendors can facilitate
                                               will be less valuable to that BD because                attract orders, setting relatively low                single or multiple BDs’ production of
                                               it does not provide information about                   prices for accessing posted liquidity,                proprietary data products. The potential
                                               the venue to which it is directing its                  and setting relatively high prices for                sources of proprietary products are
                                               orders. Data from the competing venue                   market information. Still others may                  virtually limitless. Notably, the
                                               to which the BD is directing orders will                provide most data free of charge and                  potential sources of data include the
                                               become correspondingly more valuable.                   rely exclusively on transaction fees to               BDs that submit trade reports to TRFs
                                                  Thus, an increase in the fees charged                recover their costs. Finally, some                    and that have the ability to consolidate
                                               for either transactions or data has the                 platforms may incentivize use by                      and distribute their data without the
                                               potential to impair revenues from both                  providing opportunities for equity                    involvement of FINRA or an exchange-
                                               products. ‘‘No one disputes that                        ownership, which may allow them to                    operated TRF.
                                               competition for order flow is ‘fierce’.’’               charge lower direct fees for executions                  The fact that proprietary data from
                                               NetCoalition at 24. However, the                        and data.                                             ATSs, BDs, and vendors can by-pass
                                               existence of fierce competition for order                  In this environment, there is no                   SROs is significant in two respects.
                                               flow implies a high degree of price                     economic basis for regulating maximum                 First, non-SROs can compete directly
                                               sensitivity on the part of BDs with order               prices for one of the joint products in an            with SROs for the production and sale
                                               flow, since they may readily reduce                     industry in which suppliers face                      of proprietary data products, as BATS
                                               costs by directing orders toward the                    competitive constraints with regard to                and NYSE Arca did before registering as
                                               lowest-cost trading venues. A BD that                   the joint offering. Such regulation is                exchanges by publishing proprietary
                                               shifted its order flow from one platform                unnecessary because an ‘‘excessive’’                  book data on the internet. Second,
                                               to another in response to order                         price for one of the joint products will              because a single order or transaction
                                               execution price differentials would both                ultimately have to be reflected in lower              report can appear in a core data product,
                                               reduce the value of that platform’s                     prices for other products sold by the                 a SRO proprietary product, and/or a
                                               market data and reduce its own need to                  firm, or otherwise the firm will                      non-SRO proprietary product, the data
                                               consume data from the disfavored                        experience a loss in the volume of its                available in proprietary products is
                                               platform. Similarly, if a platform                      sales that will be adverse to its overall             exponentially greater than the actual
                                               increases its market data fees, the                     profitability. In other words, an increase            number of orders and transaction
                                               change will affect the overall cost of                  in the price of data will ultimately have             reports that exist in the marketplace.
                                               doing business with the platform, and                   to be accompanied by a decrease in the                   In addition to the competition and
                                               affected BDs will assess whether they                   cost of executions, or the volume of both             price discipline described above, the
                                               can lower their trading costs by                        data and executions will fall.                        market for proprietary data products is
                                               directing orders elsewhere and thereby                     The level of competition and                       also highly contestable because market
                                               lessening the need for the more                         contestability in the market is evident in            entry is rapid, inexpensive, and
                                               expensive data.                                         the numerous alternative venues that                  profitable. The history of electronic
                                                  Analyzing the cost of market data                    compete for order flow, including                     trading is replete with examples of
                                               distribution in isolation from the cost of              eleven SRO markets, as well as                        entrants that swiftly grew into some of
                                               all of the inputs supporting the creation               internalizing BDs and various forms of                the largest electronic trading platforms
                                               of market data will inevitably                          alternative trading systems (‘‘ATSs’’),               and proprietary data producers:
                                               underestimate the cost of the data. Thus,               including dark pools and electronic                   Archipelago, Bloomberg Tradebook,
                                               because it is impossible to create data                 communication networks (‘‘ECNs’’).                    Island, RediBook, Attain, TracECN,
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                                               without a fast, technologically robust,                 Each SRO market competes to produce                   BATS Trading and BATS/Direct Edge. A
                                               and well-regulated execution system,                    transaction reports via trade executions,             proliferation of dark pools and other
                                               system costs and regulatory costs affect                and two FINRA-regulated TRFs compete                  ATSs operate profitably with
                                               the price of market data. It would be                   to attract internalized transaction                   fragmentary shares of consolidated
                                               equally misleading, however, to                         reports. It is common for BDs to further              market volume.
                                               attribute all of the exchange’s costs to                and exploit this competition by sending                  Regulation NMS, by deregulating the
                                               the market data portion of an exchange’s                their order flow and transaction reports              market for proprietary data, has


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                                               55254                       Federal Register / Vol. 81, No. 160 / Thursday, August 18, 2016 / Notices

                                               increased the contestability of that                    action is necessary or appropriate in the             2016–40, and should be submitted on or
                                               market. While BDs have previously                       public interest, for the protection of                before September 8, 2016.
                                               published their proprietary data                        investors, or would otherwise further                   For the Commission, by the Division of
                                               individually, Regulation NMS                            the purposes of the Act. If the                       Trading and Markets, pursuant to delegated
                                               encourages market data vendors and                      Commission takes such action, the                     authority.21
                                               BDs to produce proprietary products                     Commission shall institute proceedings                Robert W. Errett,
                                               cooperatively in a manner never before                  to determine whether the proposed rule                Deputy Secretary.
                                               possible. Multiple market data vendors                  should be approved or disapproved.                    [FR Doc. 2016–19687 Filed 8–17–16; 8:45 am]
                                               already have the capability to aggregate
                                                                                                       IV. Solicitation of Comments                          BILLING CODE 8011–01–P
                                               data and disseminate it on a profitable
                                               scale, including Bloomberg and                            Interested persons are invited to
                                               Thomson Reuters. In Europe, Cinnober                    submit written data, views, and                       SECURITIES AND EXCHANGE
                                               aggregates and disseminates data from                   arguments concerning the foregoing,                   COMMISSION
                                               over 40 brokers and multilateral trading                including whether the proposed rule
                                               facilities.18                                           change is consistent with the Act.                    [Release No. 34–78566; File No. SR–ICC–
                                                  In this environment, a super-                        Comments may be submitted by any of                   2016–009]
                                               competitive increase in the fees charged                the following methods:
                                               for either transactions or data has the                                                                       Self-Regulatory Organizations; ICE
                                                                                                       Electronic Comments                                   Clear Credit LLC; Order Approving
                                               potential to impair revenues from both
                                               products. ‘‘No one disputes that                          • Use the Commission’s Internet                     Proposed Rule Change To Revise the
                                               competition for order flow is ‘fierce’.’’               comment form (http://www.sec.gov/                     ICC Treasury Operations Policies and
                                               NetCoalition I at 539. The existence of                 rules/sro.shtml); or                                  Procedures
                                               fierce competition for order flow                         • Send an email to rule-comments@                   August 12, 2016.
                                               implies a high degree of price sensitivity              sec.gov. Please include File Number SR–
                                               on the part of BDs with order flow, since               BOX–2016–40 on the subject line.                      I. Introduction
                                               they may readily reduce costs by                        Paper Comments                                           On June 15, 2016, ICE Clear Credit
                                               directing orders toward the lowest-cost                                                                       LLC (‘‘ICC’’) filed with the Securities
                                               trading venues. A BD that shifted its                      • Send paper comments in triplicate                and Exchange Commission
                                               order flow from one platform to another                 to Secretary, Securities and Exchange                 (‘‘Commission’’), pursuant to Section
                                               in response to order execution price                    Commission, 100 F Street NE.,                         19(b)(1) of the Securities Exchange Act
                                               differentials would both reduce the                     Washington, DC 20549–1090.                            of 1934 (‘‘Act’’) 1 and Rule 19b–4
                                               value of that platform’s market data and                All submissions should refer to File                  thereunder,2 a proposed rule change to
                                               reduce its own need to consume data                     Number SR–BOX–2016–40. This file                      revise the ICC Treasury Operations
                                               from the disfavored platform. If a                      number should be included on the                      Policies and Procedures to provide for
                                               platform increases its market data fees,                subject line if email is used. To help the            the use of a committed foreign exchange
                                               the change will affect the overall cost of              Commission process and review your                    (‘‘FX’’) facility, to make changes to the
                                               doing business with the platform, and                   comments more efficiently, please use                 investment guidelines as well as
                                               affected BDs will assess whether they                   only one method. The Commission will                  additional clean-up changes, and to
                                               can lower their trading costs by                        post all comments on the Commission’s                 provide additional clarification
                                               directing orders elsewhere and thereby                  Internet Web site (http://www.sec.gov/                regarding the calculation of collateral
                                               lessening the need for the more                         rules/sro.shtml). Copies of the                       haircuts (SR–ICC–2016–009). The
                                               expensive data.                                         submission, all subsequent                            proposed rule change was published for
                                                                                                       amendments, all written statements                    comment in the Federal Register on
                                               C. Self-Regulatory Organization’s
                                                                                                       with respect to the proposed rule                     June 30, 2016.3 The Commission did not
                                               Statement on Comments on the
                                                                                                       change that are filed with the                        receive comments on the proposed rule
                                               Proposed Rule Change Received From
                                                                                                       Commission, and all written                           change. For the reasons discussed
                                               Members, Participants, or Others
                                                                                                       communications relating to the                        below, the Commission is approving the
                                                 No written comments were either                       proposed rule change between the                      proposed rule change.
                                               solicited or received.                                  Commission and any person, other than
                                                                                                       those that may be withheld from the                   II. Description of the Proposed Rule
                                               III. Date of Effectiveness of the                                                                             Change
                                               Proposed Rule Change and Timing for                     public in accordance with the
                                               Commission Action                                       provisions of 5 U.S.C. 552, will be                      ICC will revise its Treasury
                                                                                                       available for Web site viewing and                    Operations Policies and Procedures to
                                                  The foregoing rule change has become                 printing in the Commission’s Public                   provide for the use of a committed FX
                                               effective pursuant to Section                           Reference Room, 100 F Street NE.,                     facility. ICC has established a
                                               19(b)(3)(A)(ii) of the Exchange Act 19                  Washington, DC 20549 on official                      committed FX facility which provides
                                               and Rule 19b–4(f)(2) thereunder,20                      business days between the hours of                    for same day settled spot FX
                                               because it establishes or changes a due,                10:00 a.m. and 3:00 p.m. Copies of such               transactions. ICC represents that the
                                               or fee.                                                 filing also will be available for                     facility allows ICC to use available
                                                  At any time within 60 days of the                    inspection and copying at the principal               United States Dollars (‘‘USD’’) to
                                               filing of the proposed rule change, the                 office of the Exchange. All comments                  convert into Euro to meet a Euro
                                               Commission summarily may
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                                                                                                       received will be posted without change;               liquidity need, for example in the
                                               temporarily suspend the rule change if                  the Commission does not edit personal
                                               it appears to the Commission that the                   identifying information from                            21 17  CFR 200.30–3(a)(12).
                                                                                                                                                               1 15  U.S.C. 78s(b)(1).
                                                 18 See http://www.cinnober.com/boat-trade-
                                                                                                       submissions. You should submit only
                                                                                                                                                                2 17 CFR 240.19b–4.
                                               reporting.
                                                                                                       information that you wish to make                        3 Securities Exchange Act Release No. 34–78205
                                                 19 15 U.S.C. 78s(b)(3)(A)(ii).                        available publicly. All submissions                   (June 30, 2016), 81 FR 44357 (July 7, 2016) (SR–
                                                 20 17 CFR 240.19b–4(f)(2).                            should refer to File Number SR–BOX–                   ICC–2016–009).



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Document Created: 2016-08-17 23:46:40
Document Modified: 2016-08-17 23:46:40
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 55251 

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