81 FR 64250 - 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 To Change the Fees and Credits for Facilitation and Solicitation Transactions
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 181 (September 19, 2016)
Federal Register Volume 81, Issue 181 (September 19, 2016)
| Page Range | 64250-64253 | |
| FR Document | 2016-22421 |
[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)] [Notices] [Pages 64250-64253] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-22421] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78828; File No. SR-BOX-2016-43] 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 To Change the Fees and Credits for Facilitation and Solicitation Transactions September 13, 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 31, 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). --------------------------------------------------------------------------- [[Page 64251]] 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 a number of changes to the fees and credits for Facilitation and Solicitation Transactions on the BOX Market LLC (``BOX'') options facility. While changes to the fee schedule pursuant to this proposal will be effective upon filing, the changes will become operative on September 1, 2016. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at http://boxexchange.com. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule for trading on BOX to make a number of changes to the fees and credits for Facilitation and Solicitation Transactions.\5\ --------------------------------------------------------------------------- \5\ Transactions executed through the Solicitation Auction mechanism and Facilitation Auction mechanism. --------------------------------------------------------------------------- Exchange Fees The Exchange proposes to remodel the fee structure for Facilitation and Solicitation Transactions. Currently, Facilitation and Solicitation transactions are assessed per contract fees based upon account type and whether the order is a: (i) Agency Order; \6\ (ii) Facilitation Order or Solicitation Order; \7\ or (iii) Response in the Solicitation or Facilitation Auction Mechanisms. --------------------------------------------------------------------------- \6\ An Agency Order is a block-size order that an Order Flow Provider seeks to facilitate as agent through the Facilitation Auction or Solicitation Auction mechanism. Agency Orders can be submitted by all BOX account types. \7\ Facilitation and Solicitation Orders are the matching contra orders submitted on the opposite side of the Agency Order. --------------------------------------------------------------------------- First, the Exchange proposes to restructure the Facilitation and Solicitation Transactions fee schedule to differentiate between fees assessed in Penny and Non-Penny Pilot Classes. The Exchange then proposes to adjust certain fees throughout the Facilitation and Solicitation Transactions fee structure. Specifically, the Exchange proposes to increase the fees assessed for Non-Public Customers \8\ for Agency Orders and Facilitation and Solicitation Orders to $0.15 from $0.00. Public Customer fees for Agency Orders and Facilitation and Solicitation Orders will remain at $0.00. The Exchange then proposes to adjust the fees assessed for Responses in the Solicitation or Facilitation Auction Mechanisms. Specifically, the Exchange proposes to assess a $0.25 fee in Penny Pilot Classes and a $0.40 fee in Non-Penny Pilot Classes, regardless of account type. Under the current fee structure, Public Customers are assessed $0.15, Broker Dealers and Professional Customers are assessed $0.27 and Market Makers are assessed $0.20 for Responses in the Solicitation or Facilitation Auction Mechanisms. --------------------------------------------------------------------------- \8\ Non-Public Customers are defined within the BOX Fee Schedule as Professional Customers, Broker Dealers and Market Makers. --------------------------------------------------------------------------- The proposed Facilitation and Solicitation Transactions fee structure will be as follows: -------------------------------------------------------------------------------------------------------------------------------------------------------- Agency order Facilitation order or Responses in the solicitation -------------------------------- solicitation order or facilitation auction -------------------------------- mechanisms Account type Penny pilot Non-penny ------------------------------- classes pilot classes Penny pilot Non-penny Penny pilot Non-penny classes pilot classes classes pilot classes -------------------------------------------------------------------------------------------------------------------------------------------------------- Public Customer......................................... $0.00 $0.00 $0.00 $0.00 $0.25 $0.40 Professional Customer or Broker Dealer.................. 0.15 0.15 0.15 0.15 0.25 0.40 Market Maker............................................ 0.15 0.15 0.15 0.15 0.25 0.40 -------------------------------------------------------------------------------------------------------------------------------------------------------- Next, the Exchange proposes to establish Section I.C.1, Facilitation and Solicitation Transaction Rebate which will provide a $0.10 per contract rebate to Agency Orders executed through the Facilitation and Solicitation Auction Mechanisms where at least one party is a Non-Public Customer. For example, a Public Customer Agency Order that executes against a Non-Public Customer Order through the Facilitation Auction mechanism would receive a $0.10 rebate. Further, a Public Customer Agency Order that executes against a Public Customer Order through the Facilitation Auction mechanism would not receive a rebate. Liquidity Fees and Credits The Exchange then proposes to amend Section II.B. of the BOX Fee Schedule, (Liquidity Fees and Credits for Facilitation and Solicitation Transactions). Specifically, the Exchange proposes to decrease the fees and credits for Facilitation and Solicitation transactions in both Penny and Non-Penny Pilot Classes. The Exchange proposes to decrease the fees for adding liquidity in Facilitation and Solicitation transactions to $0.75 from $0.95 in Non-Penny Pilot Classes, and to $0.25 from $0.40 in Penny Pilot Classes. The Exchange also proposes to decrease the credits for removing liquidity in Facilitation and Solicitation transactions. Specifically, the Exchange proposes to decrease the credit to $0.75 from $1.00 in Non-Penny Pilot Classes, and $0.25 from $0.45 in Penny Pilot Classes. 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,\9\ 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. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- [[Page 64252]] Exchange Fees The Exchange believes that remodeling the fee structure for Facilitation and Solicitation Transactions is reasonable, equitable and not unfairly discriminatory. In particular, the proposed revisions will allow the Exchange to apply separate fees for certain transactions in Penny and Non-Penny Pilot Classes, a distinction that is made in many other sections of the BOX Fee Schedule, including Section I.A (Non- Auction Transactions) and Section III.A (All Complex Orders). The Exchange also believes the proposed fees for Non-Public Customers for Agency Orders and Facilitation and Solicitation Orders in Penny or Non-Penny Pilot Classes are reasonable, equitable and not unfairly discriminatory. Professional Customers and Broker Dealers and Market Makers are not currently charged for Agency Orders and Facilitation and Solicitation Orders. The proposal increases the fees for all Non-Public Customers to $0.15 for both Agency Orders and Facilitation and Solicitation Orders in Penny and Non-Penny Pilot Classes. The Exchange believes these fees are reasonable as they are in line with another exchange in the industry.\10\ For example, at the ISE, the fee for both the initiating order and contra order in a Crossing Order \11\ is $0.20 for Market Makers, Broker Dealers and Professional Customers, and $0.00 for Public Customers in Penny Pilot Classes. In Non-Penny Pilot Classes, the fees for the initiating order and contra order in a Crossing Order is $0.20 for Professional Customers and Broker Dealers, $0.25 for Market Makers and $0.00 for Public Customers. --------------------------------------------------------------------------- \10\ See International Securities Exchange (``ISE'') Fee Schedule Section I available at https://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf. \11\ Under the ISE Fee Schedule Crossing Orders are any orders executed in the Exchange's auction mechanisms, including the Facilitation and Solicitation mechanisms. --------------------------------------------------------------------------- The Exchange believes that charging Professional Customers and Broker Dealers and Market Makers more than Public Customers for Agency Orders and Facilitation and Solicitation Orders is reasonable, equitable and not unfairly discriminatory. The securities markets generally, and BOX in particular, have historically aimed to improve markets for investors and develop various features within the market structure for Public Customer benefit. The Exchange believes that charging lower fees to Public Customers in Facilitation and Solicitation transactions is reasonable and, ultimately, will benefit all Participants trading on the Exchange by attracting Public Customer order flow. The Exchange also believes the proposed fees for Responses in the Solicitation or Facilitation Auction Mechanisms in Penny and Non-Penny Pilot Classes are reasonable, and equitable. The proposal changes the fees to $0.25 and $0.40 in Penny and Non-Penny Pilot Classes, respectively, regardless of account type. Moreover, the proposed fees are competitive with fees charged by another options exchange.\12\ For example, at the ISE, fees for Responses to Crossing Orders are $0.50, regardless of Participant type, in both Penny and Non-Penny Pilot Classes. The Exchange also notes that the proposed fees for Responses to Facilitation or Solicitation Orders are not unfairly discriminatory because they apply equally to all Participants. --------------------------------------------------------------------------- \12\ See supra note 10. --------------------------------------------------------------------------- The Exchange believes it is reasonable to establish different fees for Facilitation and Solicitation transactions in Penny Pilot Classes compared to transactions in Non-Penny Pilot Classes. The Exchange makes this distinction throughout the BOX Fee Schedule, including the Exchange Fees for PIP and COPIP Transactions. The Exchange believes it is reasonable to establish higher fees for Non-Penny Pilot Classes because these Classes are typically less actively traded and have wider spreads. The Exchange also believes that establishing a $0.10 per contract rebate to Agency Orders executed through the Facilitation and Solicitation Auction Mechanisms where at least one party is a Non- Public Customer is reasonable, equitable and not unfairly discriminatory. The Exchange believes that it is reasonable and equitable to provide the opportunity to receive a rebate to incentivize Participants to direct Facilitation and Solicitation order flow to the Exchange, which will result [sic] ultimately benefit all Participant [sic] trading on the Exchange. The Exchange believes it is reasonable and appropriate that ``Public Customer to Public Customer'' transactions do not receive the proposed rebate, as these orders are never assessed Facilitation and Solicitation transaction fees and therefore should not also receive the benefit of the rebate. Further, the Exchange believes that the rebate is reasonable and equitable because other exchanges offer a similar distinction in Facilitation and Solicitation rebates.\13\ Finally, the Exchange believes that the proposed changes are not unfairly discriminatory because the rebate would be uniformly applied to all Agency Orders where at least one party is a Non-Public Customer. --------------------------------------------------------------------------- \13\ See the ISE Fee Schedule, Section IV.A. (QCC and Solicitation Rebates). ISE offers a per contract rebate for agency orders in its Facilitation and Solicitation Auction Mechanisms. A higher rebate is given to Non-Customer to Customer Facilitation and Solicitation Transactions ($0.00 to $0.11 depending on volume) than Customer to Customer Facilitation and Solicitation Transactions ($0.00 to $0.03 depending on volume). See also Chicago Board Options Exchange (``CBOE'') Fee Schedule, QCC Rate Table available at http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf. CBOE offers a per contract $0.10 credit for the equivalent of Facilitation and Solicitation transactions that occur between Non-Customer to Customer executions; however, no credit is offered for Customer to Customer executions. --------------------------------------------------------------------------- Liquidity Fees and Credits The Exchange believes that lowering the liquidity fees and rebates for Facilitation and Solicitation transactions is reasonable and equitable. Under the proposed change the fee for adding liquidity will be lowered to $0.75 from $0.95 (Non-Penny Pilot Class) and to $0.25 from $0.40 (Penny Pilot Class). Accordingly, the credit for removing liquidity will be lowered to $0.75 from $1.00 (Non-Penny Pilot Class) and to $0.25 from $0.45 (Penny Pilot Class). The Exchange also notes that the proposed liquidity fees and credits for Facilitation or Solicitation transactions are not unfairly discriminatory because they apply equally to all Participants. BOX believes that the changes to Facilitation and Solicitation transaction liquidity fees and credits are equitable and not unfairly discriminatory in that they apply to all categories of participants and across all account types. The Exchange notes that liquidity fees and credits on BOX are meant to offset one another in any particular transaction. The liquidity fees and credits do not directly result in revenue to BOX, but will simply allow BOX to provide the credit incentive to Participants to attract order flow. The Exchange believes it is appropriate to provide incentives to market participants to use the Facilitation and Solicitation auction mechanisms, because doing so may result in greater liquidity on BOX which would benefit all market participants. Further, the Exchange believes that the proposed changes are reasonable as they are in line with another exchange in the industry.\14\ --------------------------------------------------------------------------- \14\ Id. --------------------------------------------------------------------------- Finally, the Exchange believes it is reasonable to establish different fees and credits for Facilitation and Solicitation transactions in Penny Pilot Classes compared to transactions in Non- Penny Pilot Classes. The Exchange makes this distinction throughout the BOX Fee [[Page 64253]] Schedule, including the liquidity fees and credits for PIP and COPIP Transactions. The Exchange believes it is reasonable to establish higher fees and credits for Non-Penny Pilot Classes because these Classes are typically less actively traded and have wider spreads. The Exchange believes that offering a higher rebate will incentivize order flow in Non-Penny Pilot issues on the Exchange, ultimately benefitting all Participants trading on BOX. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed adjustments to the Facilitation and Solicitation Transaction fees 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 their Facilitation and Solicitation Transactions and are designed to enhance competition in these auction mechanisms. Submitting an order is entirely voluntary and Participants can determine which type of order they wish to submit, if any, to the Exchange. The Exchange believes that the proposed rebate for Facilitation and Solicitation transactions will not impose a burden on competition among various Exchange Participants. The Exchange believes the proposed rebate is attractive to market participants and is similar to rebates offered by other exchanges.\15\ Further, the Exchange does not believe that the proposed rule change to not offer a rebate for ``Public Customer to Public Customer'' transactions will burden intramarket competition because although ``Public Customer to Public Customer'' transactions will not receive a rebate, these transactions are not assessed Facilitation and Solicitation transaction fees (unlike Non- ``Customer to Customer'' Facilitation and Solicitation transactions). The Exchange does not believe that the proposed rule changes will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed rule change applies only to BOX and because other Exchanges have similar exclusions.\16\ --------------------------------------------------------------------------- \15\ See supra note 13. CBOE does not offer a rebate (credit) for Customer to Customer executions. \16\ Id. --------------------------------------------------------------------------- The Exchange also believes that amending the proposed liquidity fees and credits for Facilitation and Solicitation Transactions will not impose a burden on competition among various Exchange Participants. The Exchange believes that the proposed changes will result with these Participants being charged or credited appropriately for these transactions. 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 \17\ and Rule 19b-4(f)(2) thereunder,\18\ because it establishes or changes a due, or fee. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A)(ii). \18\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BOX-2016-43 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-2016-43. 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-2016-43, and should be submitted on or before October 11, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-22421 Filed 9-16-16; 8:45 am] BILLING CODE 8011-01-P
![64250 Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
critical role by guaranteeing the Non- III. Date of Effectiveness of the printing in the Commission’s Public
Public Customer PIP or COPIP Order an Proposed Rule Change and Timing for Reference Room, 100 F Street NE.,
execution at the NBBO or at a better Commission Action Washington, DC 20549 on official
price, and is subject to market risk while The foregoing rule change has become business days between the hours of
the Non-Public Customer PIP Order or effective pursuant to Section 10:00 a.m. and 3:00 p.m. Copies of such
COPIP Order is exposed to other BOX 19(b)(3)(A)(ii) of the Exchange Act 9 and filing also will be available for
Participants for the price improvement Rule 19b–4(f)(2) thereunder,10 because inspection and copying at the principal
opportunity. Therefore, the Exchange it establishes or changes a due, or fee. office of the Exchange. All comments
believes for Non-Public Customer PIP At any time within 60 days of the received will be posted without change;
and COPIP Orders it is equitable and not filing of the proposed rule change, the the Commission does not edit personal
unfairly discriminatory to instead Commission summarily may identifying information from
provide the liquidity credit to the temporarily suspend the rule change if submissions. You should submit only
Initiating Participant’s Primary it appears to the Commission that the information that you wish to make
Improvement Order so that the Initiating action is necessary or appropriate in the available publicly. All submissions
Participant will continue to submit Non- public interest, for the protection of should refer to File Number SR–BOX–
Public Customer PIP or COPIP Orders to investors, or would otherwise further 2016–44, and should be submitted on or
the PIP and COPIP. Further, the the purposes of the Act. If the before October 11, 2016.
Exchange believes that the proposed Commission takes such action, the For the Commission, by the Division of
change will have no impact on Commission shall institute proceedings Trading and Markets, pursuant to delegated
competition in the PIP or COPIP, as to determine whether the proposed rule authority.11
Responders will continue to be charged should be approved or disapproved. Robert W. Errett,
the same liquidity fee. Deputy Secretary.
IV. Solicitation of Comments
B. Self-Regulatory Organization’s [FR Doc. 2016–22423 Filed 9–16–16; 8:45 am]
Interested persons are invited to
Statement on Burden on Competition submit written data, views, and BILLING CODE 8011–01–P
The Exchange does not believe that arguments concerning the foregoing,
including whether the proposed rule
the proposed rule change will impose SECURITIES AND EXCHANGE
change is consistent with the Act.
any burden on competition not COMMISSION
Comments may be submitted by any of
necessary or appropriate in furtherance
the following methods:
of the purposes of the Act. Specifically, [Release No. 34–78828; File No. SR–BOX–
the Exchange believes that amending Electronic Comments 2016–43]
where the liquidity credit is applied in • Use the Commission’s Internet
Non-Public Customer PIP and COPIP comment form (http://www.sec.gov/ Self-Regulatory Organizations; BOX
Transactions will not impose a burden rules/sro.shtml); or Options Exchange LLC; Notice of
on competition among various Exchange • Send an email to rule-comments@ Filing and Immediate Effectiveness of
Participants. The Exchange believes that sec.gov. Please include File Number SR– a Proposed Rule Change To Amend
the proposed changes will result in BOX–2016–44 on the subject line. the Fee Schedule on the BOX Market
these Participants being credited LLC (‘‘BOX’’) Options Facility To
appropriately for these transactions. Paper Comments Change the Fees and Credits for
Finally, the Exchange notes that it • Send paper comments in triplicate Facilitation and Solicitation
operates in a highly competitive market to Secretary, Securities and Exchange Transactions
in which market participants can Commission, 100 F Street NE.,
Washington, DC 20549–1090. September 13, 2016.
readily favor competing exchanges. In
such an environment, the Exchange All submissions should refer to File Pursuant to Section 19(b)(1) of the
must continually review, and consider Number SR–BOX–2016–44. This file Securities Exchange Act of 1934 (the
adjusting, its fees and credits to remain number should be included on the ‘‘Act’’),1 and Rule 19b–4 thereunder,2
competitive with other exchanges. For subject line if email is used. To help the notice is hereby given that on August
the reasons described above, the Commission process and review your 31, 2016, BOX Options Exchange LLC
Exchange believes that the proposed comments more efficiently, please use (the ‘‘Exchange’’) filed with the
rule change reflects this competitive only one method. The Commission will Securities and Exchange Commission
environment. post all comments on the Commission’s (‘‘Commission’’) the proposed rule
Internet Web site (http://www.sec.gov/ change as described in Items I, II, and
C. Self-Regulatory Organization’s rules/sro.shtml). Copies of the III below, which Items have been
Statement on Comments on the submission, all subsequent prepared by the Exchange. The
Proposed Rule Change Received From amendments, all written statements Exchange filed the proposed rule change
Members, Participants, or Others with respect to the proposed rule pursuant to Section 19(b)(3)(A)(ii) of the
change that are filed with the Act,3 and Rule 19b–4(f)(2) thereunder,4
No written comments were either
Commission, and all written which renders the proposal effective
solicited or received.
communications relating to the upon filing with the Commission. The
proposed rule change between the Commission is publishing this notice to
allocation privileges upon conclusion of the PIP or
mstockstill on DSK3G9T082PROD with NOTICES
COPIP for up to forty percent (40%) of the
Commission and any person, other than solicit comments on the proposed rule
remaining size of the PIP or COPIP Order after those that may be withheld from the change from interested persons.
Public Customer orders are satisfied. If only one public in accordance with the
competing order matches the Initiating Participant’s provisions of 5 U.S.C. 552, will be 11 17 CFR 200.30–3(a)(12).
Single-Priced Primary Improvement Order at the
final price level, then the Initiating Participant may
available for Web site viewing and 1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
retain priority for up to fifty percent (50%) of the
9 15 U.S.C. 78s(b)(3)(A)(ii). 3 15 U.S.C. 78s(b)(3)(A)(ii).
remaining size of the PIP or COPIP Order after
Public Customer orders are satisfied. 10 17 CFR 240.19b–4(f)(2). 4 17 CFR 240.19b–4(f)(2).
VerDate Sep<11>2014 21:47 Sep 16, 2016 Jkt 238001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\19SEN1.SGM 19SEN1](https://thefederalregister.org/doc/81_FR_64431/page/1.svg)
![64252 Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
Exchange Fees Participants trading on the Exchange by Finally, the Exchange believes that the
The Exchange believes that attracting Public Customer order flow. proposed changes are not unfairly
The Exchange also believes the discriminatory because the rebate would
remodeling the fee structure for
proposed fees for Responses in the be uniformly applied to all Agency
Facilitation and Solicitation
Solicitation or Facilitation Auction Orders where at least one party is a
Transactions is reasonable, equitable
Mechanisms in Penny and Non-Penny Non-Public Customer.
and not unfairly discriminatory. In
Pilot Classes are reasonable, and
particular, the proposed revisions will Liquidity Fees and Credits
equitable. The proposal changes the fees
allow the Exchange to apply separate to $0.25 and $0.40 in Penny and Non- The Exchange believes that lowering
fees for certain transactions in Penny Penny Pilot Classes, respectively, the liquidity fees and rebates for
and Non-Penny Pilot Classes, a regardless of account type. Moreover, Facilitation and Solicitation
distinction that is made in many other the proposed fees are competitive with transactions is reasonable and equitable.
sections of the BOX Fee Schedule, fees charged by another options Under the proposed change the fee for
including Section I.A (Non-Auction exchange.12 For example, at the ISE, fees adding liquidity will be lowered to
Transactions) and Section III.A (All for Responses to Crossing Orders are $0.75 from $0.95 (Non-Penny Pilot
Complex Orders). $0.50, regardless of Participant type, in Class) and to $0.25 from $0.40 (Penny
The Exchange also believes the both Penny and Non-Penny Pilot Pilot Class). Accordingly, the credit for
proposed fees for Non-Public Customers Classes. The Exchange also notes that removing liquidity will be lowered to
for Agency Orders and Facilitation and the proposed fees for Responses to $0.75 from $1.00 (Non-Penny Pilot
Solicitation Orders in Penny or Non- Facilitation or Solicitation Orders are Class) and to $0.25 from $0.45 (Penny
Penny Pilot Classes are reasonable, not unfairly discriminatory because they Pilot Class). The Exchange also notes
equitable and not unfairly apply equally to all Participants. that the proposed liquidity fees and
discriminatory. Professional Customers The Exchange believes it is reasonable credits for Facilitation or Solicitation
and Broker Dealers and Market Makers to establish different fees for Facilitation transactions are not unfairly
are not currently charged for Agency and Solicitation transactions in Penny discriminatory because they apply
Orders and Facilitation and Solicitation Pilot Classes compared to transactions equally to all Participants.
Orders. The proposal increases the fees in Non-Penny Pilot Classes. The BOX believes that the changes to
for all Non-Public Customers to $0.15 Exchange makes this distinction Facilitation and Solicitation transaction
for both Agency Orders and Facilitation throughout the BOX Fee Schedule, liquidity fees and credits are equitable
and Solicitation Orders in Penny and including the Exchange Fees for PIP and and not unfairly discriminatory in that
Non-Penny Pilot Classes. The Exchange COPIP Transactions. The Exchange they apply to all categories of
believes these fees are reasonable as believes it is reasonable to establish participants and across all account
they are in line with another exchange higher fees for Non-Penny Pilot Classes types. The Exchange notes that liquidity
in the industry.10 For example, at the because these Classes are typically less fees and credits on BOX are meant to
ISE, the fee for both the initiating order actively traded and have wider spreads. offset one another in any particular
and contra order in a Crossing Order 11 The Exchange also believes that transaction. The liquidity fees and
is $0.20 for Market Makers, Broker establishing a $0.10 per contract rebate credits do not directly result in revenue
Dealers and Professional Customers, and to Agency Orders executed through the to BOX, but will simply allow BOX to
$0.00 for Public Customers in Penny Facilitation and Solicitation Auction provide the credit incentive to
Pilot Classes. In Non-Penny Pilot Mechanisms where at least one party is Participants to attract order flow. The
Classes, the fees for the initiating order a Non-Public Customer is reasonable, Exchange believes it is appropriate to
and contra order in a Crossing Order is equitable and not unfairly provide incentives to market
$0.20 for Professional Customers and discriminatory. The Exchange believes participants to use the Facilitation and
Broker Dealers, $0.25 for Market Makers that it is reasonable and equitable to Solicitation auction mechanisms,
and $0.00 for Public Customers. provide the opportunity to receive a because doing so may result in greater
The Exchange believes that charging rebate to incentivize Participants to liquidity on BOX which would benefit
Professional Customers and Broker direct Facilitation and Solicitation order all market participants. Further, the
Dealers and Market Makers more than flow to the Exchange, which will result Exchange believes that the proposed
Public Customers for Agency Orders [sic] ultimately benefit all Participant changes are reasonable as they are in
and Facilitation and Solicitation Orders [sic] trading on the Exchange. The line with another exchange in the
is reasonable, equitable and not unfairly Exchange believes it is reasonable and industry.14
discriminatory. The securities markets appropriate that ‘‘Public Customer to Finally, the Exchange believes it is
generally, and BOX in particular, have Public Customer’’ transactions do not reasonable to establish different fees and
historically aimed to improve markets receive the proposed rebate, as these credits for Facilitation and Solicitation
for investors and develop various orders are never assessed Facilitation transactions in Penny Pilot Classes
features within the market structure for and Solicitation transaction fees and compared to transactions in Non-Penny
Public Customer benefit. The Exchange therefore should not also receive the Pilot Classes. The Exchange makes this
believes that charging lower fees to benefit of the rebate. Further, the distinction throughout the BOX Fee
Public Customers in Facilitation and Exchange believes that the rebate is
Solicitation transactions is reasonable reasonable and equitable because other depending on volume) than Customer to Customer
and, ultimately, will benefit all exchanges offer a similar distinction in Facilitation and Solicitation Transactions ($0.00 to
$0.03 depending on volume). See also Chicago
mstockstill on DSK3G9T082PROD with NOTICES
Facilitation and Solicitation rebates.13 Board Options Exchange (‘‘CBOE’’) Fee Schedule,
10 See International Securities Exchange (‘‘ISE’’) QCC Rate Table available at http://www.cboe.com/
Fee Schedule Section I available at https:// 12 See supra note 10. publish/feeschedule/CBOEFeeSchedule.pdf. CBOE
www.ise.com/assets/documents/OptionsExchange/ 13 See the ISE Fee Schedule, Section IV.A. (QCC offers a per contract $0.10 credit for the equivalent
legal/fee/ISE_fee_schedule.pdf. and Solicitation Rebates). ISE offers a per contract of Facilitation and Solicitation transactions that
11 Under the ISE Fee Schedule Crossing Orders rebate for agency orders in its Facilitation and occur between Non-Customer to Customer
are any orders executed in the Exchange’s auction Solicitation Auction Mechanisms. A higher rebate executions; however, no credit is offered for
mechanisms, including the Facilitation and is given to Non-Customer to Customer Facilitation Customer to Customer executions.
Solicitation mechanisms. and Solicitation Transactions ($0.00 to $0.11 14 Id.
VerDate Sep<11>2014 21:47 Sep 16, 2016 Jkt 238001 PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 E:\FR\FM\19SEN1.SGM 19SEN1](https://thefederalregister.org/doc/81_FR_64431/page/3.svg)
![Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices 64253
Schedule, including the liquidity fees and credits for Facilitation and Paper Comments
and credits for PIP and COPIP Solicitation Transactions will not • Send paper comments in triplicate
Transactions. The Exchange believes it impose a burden on competition among to Secretary, Securities and Exchange
is reasonable to establish higher fees various Exchange Participants. The Commission, 100 F Street NE.,
and credits for Non-Penny Pilot Classes Exchange believes that the proposed Washington, DC 20549–1090.
because these Classes are typically less changes will result with these
All submissions should refer to File
actively traded and have wider spreads. Participants being charged or credited
Number SR–BOX–2016–43. This file
The Exchange believes that offering a appropriately for these transactions.
Finally, the Exchange notes that it number should be included on the
higher rebate will incentivize order flow
operates in a highly competitive market subject line if email is used. To help the
in Non-Penny Pilot issues on the
in which market participants can Commission process and review your
Exchange, ultimately benefitting all
readily favor competing exchanges. In comments more efficiently, please use
Participants trading on BOX.
such an environment, the Exchange only one method. The Commission will
B. Self-Regulatory Organization’s must continually review, and consider post all comments on the Commission’s
Statement on Burden on Competition adjusting, its fees and credits to remain Internet Web site (http://www.sec.gov/
The Exchange does not believe that competitive with other exchanges. For rules/sro.shtml). Copies of the
the proposed rule change will impose the reasons described above, the submission, all subsequent
any burden on competition not Exchange believes that the proposed amendments, all written statements
necessary or appropriate in furtherance rule change reflects this competitive with respect to the proposed rule
of the purposes of the Act. environment. change that are filed with the
The Exchange believes that the Commission, and all written
C. Self-Regulatory Organization’s communications relating to the
proposed adjustments to the Facilitation
Statement on Comments on the proposed rule change between the
and Solicitation Transaction fees will
Proposed Rule Change Received From Commission and any person, other than
not impose a burden on competition
Members, Participants, or Others those that may be withheld from the
among various Exchange Participants.
Rather, BOX believes that the changes No written comments were either public in accordance with the
will result in the Participants being solicited or received. provisions of 5 U.S.C. 552, will be
charged appropriately for their available for Web site viewing and
III. Date of Effectiveness of the
Facilitation and Solicitation printing in the Commission’s Public
Proposed Rule Change and Timing for
Transactions and are designed to Reference Room, 100 F Street NE.,
Commission Action
enhance competition in these auction Washington, DC 20549 on official
mechanisms. Submitting an order is The foregoing rule change has become business days between the hours of
entirely voluntary and Participants can effective pursuant to Section 10:00 a.m. and 3:00 p.m. Copies of such
determine which type of order they 19(b)(3)(A)(ii) of the Exchange Act 17 filing also will be available for
and Rule 19b–4(f)(2) thereunder,18 inspection and copying at the principal
wish to submit, if any, to the Exchange.
The Exchange believes that the because it establishes or changes a due, office of the Exchange. All comments
proposed rebate for Facilitation and or fee. received will be posted without change;
At any time within 60 days of the the Commission does not edit personal
Solicitation transactions will not impose
filing of the proposed rule change, the identifying information from
a burden on competition among various
Commission summarily may submissions. You should submit only
Exchange Participants. The Exchange
temporarily suspend the rule change if information that you wish to make
believes the proposed rebate is attractive
it appears to the Commission that the available publicly. All submissions
to market participants and is similar to
action is necessary or appropriate in the should refer to File Number SR–BOX–
rebates offered by other exchanges.15
public interest, for the protection of 2016–43, and should be submitted on or
Further, the Exchange does not believe investors, or would otherwise further
that the proposed rule change to not before October 11, 2016.
the purposes of the Act. If the
offer a rebate for ‘‘Public Customer to Commission takes such action, the For the Commission, by the Division of
Public Customer’’ transactions will Commission shall institute proceedings Trading and Markets, pursuant to delegated
burden intramarket competition because to determine whether the proposed rule
authority.19
although ‘‘Public Customer to Public should be approved or disapproved. Robert W. Errett,
Customer’’ transactions will not receive Deputy Secretary.
a rebate, these transactions are not IV. Solicitation of Comments [FR Doc. 2016–22421 Filed 9–16–16; 8:45 am]
assessed Facilitation and Solicitation Interested persons are invited to BILLING CODE 8011–01–P
transaction fees (unlike Non- ‘‘Customer submit written data, views, and
to Customer’’ Facilitation and arguments concerning the foregoing,
Solicitation transactions). The Exchange including whether the proposed rule SMALL BUSINESS ADMINISTRATION
does not believe that the proposed rule change is consistent with the Act.
changes will impose any burden on Comments may be submitted by any of Council on Underserved Communities
intermarket competition that is not the following methods: Advisory Board: Meeting
necessary or appropriate in furtherance
of the purposes of the Act because the Electronic Comments AGENCY: U.S. Small Business
proposed rule change applies only to • Use the Commission’s Internet Administration (SBA).
mstockstill on DSK3G9T082PROD with NOTICES
BOX and because other Exchanges have comment form (http://www.sec.gov/ ACTION: Notice of open Federal Advisory
similar exclusions.16 rules/sro.shtml); or Committee meetings.
The Exchange also believes that • Send an email to rule-comments@
amending the proposed liquidity fees sec.gov. Please include File Number SR– SUMMARY: The SBA is issuing this notice
BOX–2016–43 on the subject line. to announce the location, date, time and
15 See supra note 13. CBOE does not offer a rebate agenda for the initial meeting of the
(credit) for Customer to Customer executions. 17 15 U.S.C. 78s(b)(3)(A)(ii).
16 Id. 18 17 CFR 240.19b–4(f)(2). 19 17 CFR 200.30–3(a)(12).
VerDate Sep<11>2014 21:47 Sep 16, 2016 Jkt 238001 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 E:\FR\FM\19SEN1.SGM 19SEN1](https://thefederalregister.org/doc/81_FR_64431/page/4.svg)
Document Created: 2016-09-17 02:30:19
Document Modified: 2016-09-17 02:30:19
| 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 64250 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR