82_FR_18243 82 FR 18171 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Expand the Execution Range for a Customer Cross Order

82 FR 18171 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Expand the Execution Range for a Customer Cross Order

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 72 (April 17, 2017)

Page Range18171-18173
FR Document2017-07634

Federal Register, Volume 82 Issue 72 (Monday, April 17, 2017)
[Federal Register Volume 82, Number 72 (Monday, April 17, 2017)]
[Notices]
[Pages 18171-18173]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-07634]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80428; File No. SR-BOX-2017-10]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change to 
Expand the Execution Range for a Customer Cross Order

April 11, 2017.
    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 March 29, 2017, BOX Options Exchange LLC (the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to expand the execution range for a Customer 
Cross Order. The text of the proposed rule change is available from the 
principal office of the Exchange, at the Commission's Public Reference 
Room and also on the Exchange's Internet Web site at http://boxexchange.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Same as Item 3a in the 19b-4 Purpose section. [sic] Make sure all 
the footnotes copy correctly. [sic] The Exchange proposes to amend BOX 
Rule 7110(c)(5) (Customer Cross Order) to expand the execution range 
for a Customer Cross Order. This is a competitive filing that is based 
on the rules of another exchange.\3\
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    \3\ See MIAX Rule 515(h)(1). The Exchange is not copying all 
aspects of MIAX Rule 515(h)(1). Specifically, BOX is not copying the 
references to a liquidity refresh pause or route timer because the 
Exchange does not offer these functionalities.
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    A Customer Cross Order is comprised of a non-Professional, Public 
Customer Order to buy and a non-Professional, Public Customer Order to 
sell at the same price and for the same quantity.\4\ Rule 7110(c)(5) 
provides that Customer Cross Orders are automatically executed upon 
entry provided that the execution is between the best bid and offer on 
BOX and will not trade through the NBBO. Customer Cross Orders are 
automatically canceled if they cannot be executed. Customer Cross 
Orders may only be entered in the regular trading increments applicable 
to the options classes under Rule 7050. IM-7140-1 \5\ applies to the 
entry and execution of Customer Cross Orders.
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    \4\ See Rule 7110(c)(5).
    \5\ This Rule prevents an Options Participant executing agency 
orders to increase its economic gain from trading against the order 
without first giving other trading interest on BOX an opportunity to 
trade with the agency order pursuant to Rule 7150 (Price Improvement 
Period), Rule 7245 (Complex Order Price Improvement Period) or Rule 
7270 (Block Trades). However, the Exchange recognizes that it may be 
possible for an Options Participant to establish a relationship with 
a Customer or other person (including affiliates) to deny agency 
orders the opportunity to interact on BOX and to realize similar 
economic benefits as it would achieve by executing agency orders as 
principal. It will be a violation of this Rule for an Options 
Participant to circumvent this Rule by providing an opportunity for 
a Customer or other person (including affiliates) to execute against 
agency orders handled by the Options Participant immediately upon 
their entry into the Trading Host.
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    The Exchange is now proposing to expand the execution range for 
Customer Cross Orders. Specifically, a Customer Cross Order will 
automatically execute if the execution price is at or between the best 
bid and offer on BOX, provided that it is not at the same price as a 
Public Customer Order on the BOX Book. This is opposed to the current 
requirement that the execution price be strictly between the best bid 
and offer on BOX. The

[[Page 18172]]

requirement that the Customer Cross Order not trade through the NBBO 
will remain the same. The Exchange notes this is the same execution 
parameters of another exchange.\6\
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    \6\ See supra, note 3.
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    The following examples are designed to illustrate the current 
behavior of a Customer Cross Order in addition to how a Customer Cross 
Order will behave after the proposed change.
Example 1
    The Exchange receives a Customer Cross Order for 100 contracts in 
ABC at 3.13. The NBBO for ABC is 3.08-3.13. The following interest is 
present on the BOX Book when the Customer Cross Order is received.

                                                                    BOX Book for ABC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              Account                                    Quantity           Buy              Sell           Quantity         Account
--------------------------------------------------------------------------------------------------------------------------------------------------------
MM.................................................................              10             3.08             3.13               10               MM
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Pursuant to Rule 7110(c)(5), the Customer Cross Order would be 
rejected because the execution price (3.13) is at the best offer on the 
BOX Book, not between the best bid and offer on BOX. After the proposed 
change is implemented, the Customer Cross Order would be accepted. The 
Customer Cross Order will execute at 3.13 because, after the proposed 
change, a Customer Cross Order can execute at a price at or between the 
best bid and offer on BOX. Additionally, the execution price of 3.13 
will not trade through the NBBO.
Example 2
    Assume the same situation as Example 1 with the exception that the 
ABC sell order on the BOX Book is for the account of a Public Customer 
not a Market Maker. Pursuant to Rule 7110(c)(5), the Customer Cross 
Order would be rejected because the execution price (3.13) is at the 
best offer on the BOX Book, not between the best bid and offer on BOX. 
After the proposed change is implemented, the Customer Cross Order 
would still be rejected; however, it would be due to the fact that 
there is a Public Customer Order on the BOX Book at the execution 
price, not because the execution price is equal to the best offer on 
the BOX Book.
    Lastly, the Exchange proposes to detail the additional 
circumstances of when a Customer Cross Order is rejected. Specifically, 
the Exchange will reject a Customer Cross Order if there is an ongoing 
auction \7\ or an exposed order on the option series. The Exchange 
notes that this has been in place on the Exchange for PIP and exposed 
orders.\8\ BOX now proposes to expand the rejection of Customer Cross 
Orders to all ongoing auctions, including COPIP, Facilitation and 
Solicitation Auctions.
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    \7\ BOX's auction mechanisms include the Price Improvement 
Period (``PIP''), Complex Order Price Improvement Period 
(``COPIP''), Facilitation Auction and Solicitation Auction.
    \8\ See IC-2012-004 available at http://boxexchange.com/assets/Informational_Circular_2012-004_Customer_Cross_Orders.pdf. In this 
Circular, BOX states that Customer Cross Orders are not accepted on 
an option instrument while there is a PIP auction in progress or 
while an order is being exposed for the same option instrument.
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    The Exchange anticipates implementing the proposed change during 
the second quarter of 2017. The Exchange will provide notice of the 
exact implementation date, via Circular, prior to implementing the 
proposed change.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\9\ in general, and Section 6(b)(5) of the Act,\10\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general to protect investors and the 
public interest. In particular, the Exchange believes that the proposed 
rule change to amend BOX Rule 7110(c)(5) to expand the execution range 
of a Customer Cross Order on BOX is designed to help BOX remain 
competitive among options exchanges. The proposal to expand the 
execution range is designed to facilitate transactions, to remove 
impediments to and perfect the mechanism for a free and open market to 
the benefit of market participants by increasing opportunities for 
Customer Cross Orders to execute on the Exchange. Further, the Exchange 
believes that the proposed change is reasonable and appropriate as 
another options exchange in the industry has a similar rule currently 
in place at their exchange.\11\
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ See supra, note 3.
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    The Exchange believes that detailing the additional circumstances 
for when a Customer Cross Order may be rejected is reasonable and 
appropriate because it will make clear to Participants these 
circumstances and in turn will eliminate any potential for investor 
confusion.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. In this regard and as indicated 
above, the Exchange notes that the rule change is being proposed as a 
competitive response to the rules of another exchange.\12\ The Exchange 
does not believe the proposal will impose any burden on intermarket 
competition, as the proposed rule will allow BOX to compete with other 
options exchanges in the industry. The Exchange notes that it operates 
in a highly competitive market in which market participants can readily 
direct order flow to competing venues who offer similar functionality.
---------------------------------------------------------------------------

    \12\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if

[[Page 18173]]

consistent with the protection of investors and the public interest, 
the proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BOX-2017-10 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2017-10. 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-2017-10, and should be 
submitted on or before May 8, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07634 Filed 4-14-17; 8:45 am]
BILLING CODE 8011-01-P



                                                                                             Federal Register / Vol. 82, No. 72 / Monday, April 17, 2017 / Notices                                                                                   18171

                                                     Previous Requests for Comments: The                                        OMB Control Number: 3220–0202.                                         information from disability annuitants
                                                  RRB has already published the initial                                         Form(s) submitted: G–252.                                              who claim to be self-employed or a
                                                  60-day notice (82 FR 9250 on February                                         Type of request: Extension without                                     corporate officer or who the RRB
                                                  3, 2017) required by 44 U.S.C.                                              change of a currently approved                                           determines to be self-employed or a
                                                  3506(c)(2). That request elicited no                                        collection.                                                              corporate officer after a continuing
                                                  comments.                                                                     Affected public: Individuals or                                        disability review.
                                                                                                                              Households.                                                                Changes proposed: The RRB proposes
                                                  Information Collection Request (ICR)
                                                                                                                                Abstract: To determine entitlement or                                  no changes to Form G–252.
                                                    Title: Self-Employment/Corporate                                          continued entitlement to a disability                                      The burden estimate for the ICR is as
                                                  Officer Work and Earnings Monitoring.                                       annuity, the RRB will obtain                                             follows:

                                                                                                                                                                                                         Annual               Time                 Burden
                                                                                                               Form number                                                                             responses            (minutes)              (hours)

                                                  G–252 ..........................................................................................................................................              100                         20               33

                                                        Total ......................................................................................................................................            100     ........................             33



                                                    Additional Information or Comments:                                       solicit comments on the proposed rule                                       A Customer Cross Order is comprised
                                                  Copies of the forms and supporting                                          change from interested persons.                                          of a non-Professional, Public Customer
                                                  documents can be obtained from Dana                                                                                                                  Order to buy and a non-Professional,
                                                                                                                              I. Self-Regulatory Organization’s
                                                  Hickman at (312) 751–4981 or                                                                                                                         Public Customer Order to sell at the
                                                                                                                              Statement of the Terms of Substance of
                                                  Dana.Hickman@RRB.GOV.                                                                                                                                same price and for the same quantity.4
                                                                                                                              the Proposed Rule Change
                                                    Comments regarding the information                                                                                                                 Rule 7110(c)(5) provides that Customer
                                                  collection should be addressed to Brian                                        The Exchange proposes to expand the                                   Cross Orders are automatically executed
                                                  Foster, Railroad Retirement Board, 844                                      execution range for a Customer Cross                                     upon entry provided that the execution
                                                  North Rush Street, Chicago, Illinois                                        Order. The text of the proposed rule                                     is between the best bid and offer on
                                                  60611–1275 or Brian.Foster@rrb.gov and                                      change is available from the principal                                   BOX and will not trade through the
                                                  to the OMB Desk Officer for the RRB,                                        office of the Exchange, at the                                           NBBO. Customer Cross Orders are
                                                  Fax: 202–395–6974, Email address:                                           Commission’s Public Reference Room                                       automatically canceled if they cannot be
                                                  OIRA_Submission@omb.eop.gov.                                                and also on the Exchange’s Internet Web                                  executed. Customer Cross Orders may
                                                                                                                              site at http://boxexchange.com.                                          only be entered in the regular trading
                                                  Martha P. Rico,                                                                                                                                      increments applicable to the options
                                                  Secretary to the Board.                                                     II. Self-Regulatory Organization’s
                                                                                                                              Statement of the Purpose of, and                                         classes under Rule 7050. IM–7140–1 5
                                                  [FR Doc. 2017–07632 Filed 4–14–17; 8:45 am]
                                                                                                                              Statutory Basis for, the Proposed Rule                                   applies to the entry and execution of
                                                  BILLING CODE 7905–01–P
                                                                                                                              Change                                                                   Customer Cross Orders.
                                                                                                                                                                                                          The Exchange is now proposing to
                                                                                                                                In its filing with the Commission, the                                 expand the execution range for
                                                                                                                              self-regulatory organization included                                    Customer Cross Orders. Specifically, a
                                                  SECURITIES AND EXCHANGE                                                     statements concerning the purpose of,                                    Customer Cross Order will
                                                  COMMISSION                                                                  and basis for, the proposed rule change                                  automatically execute if the execution
                                                                                                                              and discussed any comments it received                                   price is at or between the best bid and
                                                  [Release No. 34–80428; File No. SR–BOX–                                     on the proposed rule change. The text                                    offer on BOX, provided that it is not at
                                                  2017–10]                                                                    of these statements may be examined at                                   the same price as a Public Customer
                                                                                                                              the places specified in Item IV below.                                   Order on the BOX Book. This is
                                                  Self-Regulatory Organizations; BOX                                          The self-regulatory organization has                                     opposed to the current requirement that
                                                  Options Exchange LLC; Notice of                                             prepared summaries, set forth in                                         the execution price be strictly between
                                                  Filing and Immediate Effectiveness of                                       Sections A, B, and C below, of the most                                  the best bid and offer on BOX. The
                                                  a Proposed Rule Change to Expand                                            significant aspects of such statements.
                                                  the Execution Range for a Customer                                                                                                                   a liquidity refresh pause or route timer because the
                                                                                                                              A. Self-Regulatory Organization’s
                                                  Cross Order                                                                                                                                          Exchange does not offer these functionalities.
                                                                                                                              Statement of the Purpose of, and                                            4 See Rule 7110(c)(5).

                                                  April 11, 2017.                                                             Statutory Basis for, the Proposed Rule                                      5 This Rule prevents an Options Participant


                                                     Pursuant to Section 19(b)(1) of the                                      Change                                                                   executing agency orders to increase its economic
                                                                                                                                                                                                       gain from trading against the order without first
                                                  Securities Exchange Act of 1934 (the                                        1. Purpose                                                               giving other trading interest on BOX an opportunity
                                                  ‘‘Act’’),1 and Rule 19b–4 thereunder,2                                                                                                               to trade with the agency order pursuant to Rule
                                                                                                                                 Same as Item 3a in the 19b–4 Purpose                                  7150 (Price Improvement Period), Rule 7245
                                                  notice is hereby given that on March 29,
                                                                                                                              section. [sic] Make sure all the footnotes                               (Complex Order Price Improvement Period) or Rule
                                                  2017, BOX Options Exchange LLC (the
                                                                                                                              copy correctly. [sic] The Exchange                                       7270 (Block Trades). However, the Exchange
                                                  ‘‘Exchange’’) filed with the Securities                                                                                                              recognizes that it may be possible for an Options
                                                                                                                              proposes to amend BOX Rule 7110(c)(5)
                                                  and Exchange Commission                                                                                                                              Participant to establish a relationship with a
                                                                                                                              (Customer Cross Order) to expand the                                     Customer or other person (including affiliates) to
                                                  (‘‘Commission’’) the proposed rule
mstockstill on DSK30JT082PROD with NOTICES




                                                                                                                              execution range for a Customer Cross                                     deny agency orders the opportunity to interact on
                                                  change as described in Items I and II
                                                                                                                              Order. This is a competitive filing that                                 BOX and to realize similar economic benefits as it
                                                  below, which Items have been prepared                                                                                                                would achieve by executing agency orders as
                                                                                                                              is based on the rules of another
                                                  by the self-regulatory organization. The                                                                                                             principal. It will be a violation of this Rule for an
                                                                                                                              exchange.3                                                               Options Participant to circumvent this Rule by
                                                  Commission is publishing this notice to
                                                                                                                                                                                                       providing an opportunity for a Customer or other
                                                                                                                                3 See MIAX Rule 515(h)(1). The Exchange is not                         person (including affiliates) to execute against
                                                    1 15 U.S.C. 78s(b)(1).                                                    copying all aspects of MIAX Rule 515(h)(1).                              agency orders handled by the Options Participant
                                                    2 17 CFR 240.19b–4.                                                       Specifically, BOX is not copying the references to                       immediately upon their entry into the Trading Host.



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                                                  18172                                      Federal Register / Vol. 82, No. 72 / Monday, April 17, 2017 / Notices

                                                  requirement that the Customer Cross                                        Customer Cross Order in addition to                     3.13. The NBBO for ABC is 3.08–3.13.
                                                  Order not trade through the NBBO will                                      how a Customer Cross Order will                         The following interest is present on the
                                                  remain the same. The Exchange notes                                        behave after the proposed change.                       BOX Book when the Customer Cross
                                                  this is the same execution parameters of                                                                                           Order is received.
                                                                                                                             Example 1
                                                  another exchange.6
                                                    The following examples are designed                                        The Exchange receives a Customer
                                                  to illustrate the current behavior of a                                    Cross Order for 100 contracts in ABC at

                                                                                                                                               BOX BOOK FOR ABC
                                                                                        Account                                                  Quantity               Buy             Sell             Quantity            Account

                                                  MM .......................................................................................        10                  3.08            3.13                 10                 MM



                                                    Pursuant to Rule 7110(c)(5), the                                           The Exchange anticipates                              Customer Cross Order may be rejected is
                                                  Customer Cross Order would be rejected                                     implementing the proposed change                        reasonable and appropriate because it
                                                  because the execution price (3.13) is at                                   during the second quarter of 2017. The                  will make clear to Participants these
                                                  the best offer on the BOX Book, not                                        Exchange will provide notice of the                     circumstances and in turn will
                                                  between the best bid and offer on BOX.                                     exact implementation date, via Circular,                eliminate any potential for investor
                                                  After the proposed change is                                               prior to implementing the proposed                      confusion.
                                                  implemented, the Customer Cross Order                                      change.                                                 B. Self-Regulatory Organization’s
                                                  would be accepted. The Customer Cross                                                                                              Statement on Burden on Competition
                                                                                                                             2. Statutory Basis
                                                  Order will execute at 3.13 because, after
                                                  the proposed change, a Customer Cross                                         The Exchange believes that the                          The Exchange does not believe that
                                                  Order can execute at a price at or                                         proposal is consistent with the                         the proposed rule change will impose
                                                  between the best bid and offer on BOX.                                     requirements of Section 6(b) of the                     any burden on competition not
                                                  Additionally, the execution price of 3.13                                  Securities Exchange Act of 1934 (the                    necessary or appropriate in furtherance
                                                  will not trade through the NBBO.                                           ‘‘Act’’),9 in general, and Section 6(b)(5)              of the purposes of the Act. In this regard
                                                                                                                             of the Act,10 in particular, in that it is              and as indicated above, the Exchange
                                                  Example 2                                                                                                                          notes that the rule change is being
                                                                                                                             designed to prevent fraudulent and
                                                     Assume the same situation as                                            manipulative acts and practices, to                     proposed as a competitive response to
                                                  Example 1 with the exception that the                                      promote just and equitable principles of                the rules of another exchange.12 The
                                                  ABC sell order on the BOX Book is for                                      trade, to foster cooperation and                        Exchange does not believe the proposal
                                                  the account of a Public Customer not a                                     coordination with persons engaged in                    will impose any burden on intermarket
                                                  Market Maker. Pursuant to Rule                                             facilitating transactions in securities, to             competition, as the proposed rule will
                                                  7110(c)(5), the Customer Cross Order                                       remove impediments to and perfect the                   allow BOX to compete with other
                                                  would be rejected because the execution                                    mechanism of a free and open market                     options exchanges in the industry. The
                                                  price (3.13) is at the best offer on the                                   and a national market system, and, in                   Exchange notes that it operates in a
                                                  BOX Book, not between the best bid and                                     general to protect investors and the                    highly competitive market in which
                                                                                                                                                                                     market participants can readily direct
                                                  offer on BOX. After the proposed change                                    public interest. In particular, the
                                                                                                                                                                                     order flow to competing venues who
                                                  is implemented, the Customer Cross                                         Exchange believes that the proposed
                                                                                                                                                                                     offer similar functionality.
                                                  Order would still be rejected; however,                                    rule change to amend BOX Rule
                                                  it would be due to the fact that there is                                  7110(c)(5) to expand the execution                      C. Self-Regulatory Organization’s
                                                  a Public Customer Order on the BOX                                         range of a Customer Cross Order on                      Statement on Comments on the
                                                  Book at the execution price, not because                                   BOX is designed to help BOX remain                      Proposed Rule Change Received From
                                                  the execution price is equal to the best                                   competitive among options exchanges.                    Members, Participants, or Others
                                                  offer on the BOX Book.                                                     The proposal to expand the execution                      The Exchange has neither solicited
                                                     Lastly, the Exchange proposes to                                        range is designed to facilitate                         nor received comments on the proposed
                                                  detail the additional circumstances of                                     transactions, to remove impediments to                  rule change.
                                                  when a Customer Cross Order is                                             and perfect the mechanism for a free
                                                  rejected. Specifically, the Exchange will                                  and open market to the benefit of market                III. Date of Effectiveness of the
                                                  reject a Customer Cross Order if there is                                  participants by increasing opportunities                Proposed Rule Change and Timing for
                                                  an ongoing auction 7 or an exposed                                         for Customer Cross Orders to execute on                 Commission Action
                                                  order on the option series. The                                            the Exchange. Further, the Exchange                        Because the proposed rule change
                                                  Exchange notes that this has been in                                       believes that the proposed change is                    does not (i) significantly affect the
                                                  place on the Exchange for PIP and                                          reasonable and appropriate as another                   protection of investors or the public
                                                  exposed orders.8 BOX now proposes to                                       options exchange in the industry has a                  interest; (ii) impose any significant
                                                  expand the rejection of Customer Cross                                     similar rule currently in place at their                burden on competition; and (iii) become
                                                  Orders to all ongoing auctions,                                            exchange.11                                             operative for 30 days from the date on
                                                  including COPIP, Facilitation and                                             The Exchange believes that detailing                 which it was filed, or such shorter time
mstockstill on DSK30JT082PROD with NOTICES




                                                  Solicitation Auctions.                                                     the additional circumstances for when a                 as the Commission may designate if
                                                    6 Seesupra, note 3.                                                        8 See IC–2012–004 available at http://                is a PIP auction in progress or while an order is
                                                    7 BOX’sauction mechanisms include the Price                              boxexchange.com/assets/Informational_Circular_          being exposed for the same option instrument.
                                                                                                                             2012-004_Customer_Cross_Orders.pdf. In this                9 15 U.S.C. 78f(b).
                                                  Improvement Period (‘‘PIP’’), Complex Order Price
                                                  Improvement Period (‘‘COPIP’’), Facilitation                               Circular, BOX states that Customer Cross Orders are        10 15 U.S.C. 78f(b)(5).

                                                  Auction and Solicitation Auction.                                          not accepted on an option instrument while there           11 See supra, note 3.
                                                                                                                                                                                        12 Id.




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                                                                                  Federal Register / Vol. 82, No. 72 / Monday, April 17, 2017 / Notices                                                   18173

                                                  consistent with the protection of                       those that may be withheld from the                   ‘‘Nullification and Adjustment of
                                                  investors and the public interest, the                  public in accordance with the                         Options Transactions including Obvious
                                                  proposed rule change has become                         provisions of 5 U.S.C. 552, will be                   Errors’’ by adding a new Supplementary
                                                  effective pursuant to Section 19(b)(3)(A)               available for Web site viewing and                    Material .05 to Rule 720.
                                                  of the Act 13 and Rule 19b–4(f)(6)                      printing in the Commission’s Public                      The text of the proposed rule change
                                                  thereunder.14                                           Reference Room, 100 F Street NE.,                     is available on the Exchange’s Web site
                                                     At any time within 60 days of the                    Washington, DC 20549 on official                      at www.ise.com, at the principal office
                                                  filing of the proposed rule change, the                 business days between the hours of                    of the Exchange, and at the
                                                  Commission summarily may                                10:00 a.m. and 3:00 p.m. Copies of such               Commission’s Public Reference Room.
                                                  temporarily suspend such rule change if                 filing also will be available for
                                                                                                                                                                II. Self-Regulatory Organization’s
                                                  it appears to the Commission that such                  inspection and copying at the principal
                                                                                                                                                                Statement of the Purpose of, and
                                                  action is necessary or appropriate in the               office of the Exchange. All comments
                                                                                                                                                                Statutory Basis for, the Proposed Rule
                                                  public interest, for the protection of                  received will be posted without change;
                                                                                                                                                                Change
                                                  investors, or otherwise in furtherance of               the Commission does not edit personal
                                                  the purposes of the Act. If the                         identifying information from                             In its filing with the Commission, the
                                                  Commission takes such action, the                       submissions. You should submit only                   Exchange included statements
                                                  Commission shall institute proceedings                  information that you wish to make                     concerning the purpose of and basis for
                                                  to determine whether the proposed rule                  available publicly. All submissions                   the proposed rule change and discussed
                                                  should be approved or disapproved.                      should refer to File Number SR–BOX–                   any comments it received on the
                                                                                                          2017–10, and should be submitted on or                proposed rule change. The text of these
                                                  IV. Solicitation of Comments                            before May 8, 2017.                                   statements may be examined at the
                                                    Interested persons are invited to                       For the Commission, by the Division of              places specified in Item IV below. The
                                                  submit written data, views, and                         Trading and Markets, pursuant to delegated            Exchange has prepared summaries, set
                                                  arguments concerning the foregoing,                     authority.15                                          forth in sections A, B, and C below, of
                                                  including whether the proposed rule                     Eduardo A. Aleman,                                    the most significant aspects of such
                                                  change is consistent with the Act.                      Assistant Secretary.                                  statements.
                                                  Comments may be submitted by any of                     [FR Doc. 2017–07634 Filed 4–14–17; 8:45 am]           A. Self-Regulatory Organization’s
                                                  the following methods:                                  BILLING CODE 8011–01–P                                Statement of the Purpose of, and
                                                  Electronic Comments                                                                                           Statutory Basis for, the Proposed Rule
                                                                                                                                                                Change
                                                    • Use the Commission’s Internet                       SECURITIES AND EXCHANGE
                                                  comment form (http://www.sec.gov/                       COMMISSION                                            1. Purpose
                                                  rules/sro.shtml); or                                                                                             Last year, the Exchange and other
                                                    • Send an email to rule-comments@                     [Release No. 34–80429; File No. SR–ISE–
                                                                                                                                                                options exchanges adopted a new,
                                                  sec.gov. Please include File Number SR–                 2017–30]
                                                                                                                                                                harmonized rule related to the
                                                  BOX–2017–10 on the subject line.                        Self-Regulatory Organizations; Nasdaq                 adjustment and nullification of
                                                  Paper Comments                                          ISE, LLC; Notice of Filing and                        erroneous options transactions,
                                                                                                          Immediate Effectiveness of Proposed                   including a specific provision related to
                                                    • Send paper comments in triplicate
                                                                                                          Rule Change Relating to Obvious                       coordination in connection with large-
                                                  to Brent J. Fields, Secretary, Securities
                                                                                                          Errors                                                scale events involving erroneous
                                                  and Exchange Commission, 100 F Street
                                                                                                                                                                options transactions.4 The Exchange
                                                  NE., Washington, DC 20549–1090.                         April 11, 2017.
                                                                                                                                                                believes that the changes the options
                                                  All submissions should refer to File                       Pursuant to Section 19(b)(1) of the                exchanges implemented with the new,
                                                  Number SR–BOX–2017–10. This file                        Securities Exchange Act of 1934                       harmonized rule have led to increased
                                                  number should be included on the                        (‘‘Act’’),1 and Rule 19b–4 thereunder,2               transparency and finality with respect to
                                                  subject line if email is used. To help the              notice is hereby given that on April 3,               the adjustment and nullification of
                                                  Commission process and review your                      2017, Nasdaq ISE, LLC (‘‘ISE’’ or                     erroneous options transactions.
                                                  comments more efficiently, please use                   ‘‘Exchange’’) 3 filed with the Securities             However, as part of the initial initiative,
                                                  only one method. The Commission will                    and Exchange Commission                               the Exchange and other options
                                                  post all comments on the Commission’s                   (‘‘Commission’’) the proposed rule
                                                                                                                                                                exchanges deferred a few specific
                                                  Internet Web site (http://www.sec.gov/                  change as described in Items I and II
                                                                                                                                                                matters for further discussion.
                                                  rules/sro.shtml). Copies of the                         below, which Items have been prepared                    Specifically, the options exchanges
                                                  submission, all subsequent                              by the Exchange. The Commission is                    have been working together to identify
                                                  amendments, all written statements                      publishing this notice to solicit                     ways to improve the process related to
                                                  with respect to the proposed rule                       comments on the proposed rule change                  the adjustment and nullification of
                                                  change that are filed with the                          from interested persons.                              erroneous options transactions as it
                                                  Commission, and all written                             I. Self-Regulatory Organization’s                     relates to complex orders 5 and stock-
                                                  communications relating to the                          Statement of the Terms of Substance of                option orders. The goal of the process
                                                  proposed rule change between the                        the Proposed Rule Change                              that the options exchanges have
                                                  Commission and any person, other than                                                                         undertaken is to further harmonize rules
                                                                                                             The Exchange proposes to amend
                                                                                                          Rule 720 (‘‘Current Rule’’), entitled                 related to the adjustment and
mstockstill on DSK30JT082PROD with NOTICES




                                                    13 15  U.S.C. 78s(b)(3)(A).                                                                                 nullification of erroneous options
                                                    14 17  CFR 240.19b–4(f)(6). As required under Rule
                                                  19b–4(f)(6)(iii), the Exchange provided the
                                                                                                            15 17 CFR 200.30–3(a)(12).                          transactions. As described below, the
                                                                                                            1 15 U.S.C. 78s(b)(1).
                                                  Commission with written notice of its intent to file
                                                                                                            2 17 CFR 240.19b–4.                                    4 See Securities Exchange Act Release No. 76232
                                                  the proposed rule change, along with a brief
                                                  description and the text of the proposed rule             3 ISE was renamed Nasdaq ISE, LLC in a rule         (October 22, 2015), 80 FR 66063 (October 28, 2015)
                                                  change, at least five business days prior to the date   change that became operative on April 3, 2017. See    (SR–ISE–2015–34).
                                                  of filing of the proposed rule change, or such          Securities Exchange Act Release No. 80325 (March         5 See Rule 722(a)(1) defining a complex order and

                                                  shorter time as designated by the Commission.           29, 2017) (SR–ISE–2017–25).                           (a)(2) definition a stock-option order.



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Document Created: 2018-08-25 11:27:48
Document Modified: 2018-08-25 11:27:48
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 Citation82 FR 18171 

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