82 FR 33936 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the BOX Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 139 (July 21, 2017)

[Federal Register Volume 82, Number 139 (Friday, July 21, 2017)]
[Notices]
[Pages 33936-33938]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-15321]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81153; File No. SR-BOX-2017-24]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the BOX Fee Schedule

July 17, 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 July 6, 2017, BOX Options Exchange LLC (the ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Exchange filed the 
proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ 
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend the Fee Schedule. The 
text of the proposed rule change is available from the principal office 
of the Exchange, at the Commission's Public

[[Page 33937]]

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 adopt transactions fees for Qualified Contingent Cross (``QCC'') 
transactions. A QCC Order is an originating order (Agency Order) to buy 
or sell at least 1,000 standard option contracts, or 10,000 mini-option 
contracts, that is identified as being part of a qualified contingent 
trade, coupled with a contra side order to buy or sell an equal number 
of contracts. The Exchange is proposing to establish fees for QCC 
Orders to coincide with the launch of QCC Orders on the Exchange 
beginning July 10, 2017.\5\
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    \5\ See Securities Exchange Act Release No. 80661 (May 11, 
2017), 82 FR 22682 (May 17, 2017) (Notice of Filing and Immediate 
Effectiveness SR-BOX-2017-14).
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    The Exchange proposes to establish a transaction fee for all Public 
Customer QCC Orders of $0.00 per contract side. Further, the Exchange 
proposes to establish a transaction fee for all non-Public Customer 
(Professional Customers, Broker Dealers and Market Makers) QCC Orders 
of $0.20 per contract side.\6\ In addition, the Exchange is proposing 
to adopt a $0.15 per contract rebate that will be applied to the Agency 
Order \7\ where at least one party to the QCC transaction is a Non-
Public Customer. The rebate will be paid to the Participant that 
entered the order into the BOX system. However, no rebates will be paid 
for QCC transactions in which both the Agency Order and the contra-side 
orders are Public Customers.
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    \6\ The Exchange notes that all QCC Orders will count toward 
Participant tier volume calculations.
    \7\ For QCC transactions, an Agency Order is the originating 
order to buy or sell at least 1,000 contracts or 10,000 mini-
contracts.
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    Additionally, the Exchange proposes to state explicitly in the Fee 
Schedule that a QCC transaction must be comprised of an originating 
order to buy or sell at least 1,000 contracts or 10,000 mini-option 
contracts,\8\ coupled with a contra-side order or orders totaling an 
equal number of contracts as the originating order.\9\ The Exchange 
notes that with regard to order entry, the first order submitted into 
the BOX system is marked as the Agency Order and the second order 
received by the BOX system is marked as the contra side order.
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    \8\ The Exchange notes that mini-options are not currently 
traded on BOX and are therefore not present in the BOX Fee Schedule.
    \9\ See BOX Rule 7110(c)(6).
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    Lastly, the Exchange proposes to specify that QCC Orders will be 
exempt from the Liquidity Fees and Credits outlined in Section II of 
the BOX Fee Schedule.
    The purpose of these changes is to incentivize the sending of QCC 
Orders to the Exchange. The Exchange notes that other competing 
exchanges similarly provide fees and rebates on QCC Orders.\10\
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    \10\ See Chicago Board Options Exchange (``CBOE''), Fees 
Schedule, ``QCC Rate Table,'' Page 5; Miami International Securities 
Exchange LLC (``MIAX''), Fee Schedule, Section 1(a)(vi).
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act, in general, and Section 
6(b)(4) and 6(b)(5)of the Act,\11\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among BOX Participants and other persons using its facilities 
and does not unfairly discriminate between customers, issuers, brokers 
or dealers.
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    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the proposed transaction fees for QCC Orders 
are reasonable and in line with the amount assessed at other Exchanges 
for similar transactions.\12\ Additionally, the same proposed fee would 
be charged to all non-Public Customer QCC Orders. The Exchange believes 
that charging Professional Customers and Broker Dealers and Market 
Makers more than Public Customers for QCC 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 no fees to Public Customers in QCC transactions is reasonable 
and, ultimately, will benefit all Participants trading on the Exchange 
by attracting Public Customer order flow.
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    \12\ See CBOE Fee Schedule. CBOE charges non-Public Customers 
$0.17 per contract and does not charge Public Customers. See also 
MIAX Fee Schedule. MIAX charges Non-Priority Customers $0.15 per 
contract and does not charge Priority Customers. (Priority Customers 
on MIAX are the equivalent to Public Customers on BOX).
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    The Exchange believes the proposed rebate for the originating side 
of a QCC transaction is reasonable, as other competing exchanges also 
provide a rebate on the originating side of a QCC order. Additionally, 
the proposed rebate amount is in line with the rebates offered at other 
competing exchanges.\13\ The Exchange believes the proposed rebate is 
equitable and not unfairly discriminatory because it potentially 
applies to all Participants that enter the originating order (except 
for when both the agency order and contra-side orders are Public 
Customers) and because it is intended to incentivize the sending of 
more QCC Orders to the Exchange. The Exchange believes it is 
reasonable, equitable and not unfairly discriminatory to not provide a 
rebate for the originating order for QCC transactions when both the 
originating order and contra side orders are from Public Customers, 
since Public Customers are already incentivized by having no 
transaction fee for QCC Orders.
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    \13\ CBOE and MIAX offer a $0.10 per contract credit or rebate 
paid on the initiating side of the QCC transaction.
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    The Exchange believes that exempting QCC Orders from Section II 
(Liquidity Fees and Credits) is reasonable, equitable and not unfairly 
discriminatory. The Exchange's Liquidity Fees and Credits are intended 
to attract order flow to the Exchange by offering incentives to all 
market participants to submit orders to the Exchange and the Exchange 
believes that the proposed QCC fee structure will provide appropriate 
incentives to encourage Participants to submit QCC Orders to the 
Exchange. The Exchange believes that exempting QCC Orders from 
liquidity fees and credits is reasonable compared to similar fees and 
credits offered by another exchange.\14\ The Exchange believes that 
exempting QCC Orders from liquidity fees and credits is not unfairly 
discriminatory as the exemption from the liquidity fees and credits 
applies equally to all Participants on the Exchange.
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    \14\ CBOE does not apply Taker fees and Maker rebates to QCC 
orders. See CBOE Fee Schedule Footnote 44.

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[[Page 33938]]

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 this 
proposal will not cause unnecessary burden on intermarket competition 
because the proposed changes will actually enhance the competiveness of 
the Exchange relative to other exchanges which offer comparable fees 
and rebates for QCC transactions. To the extent that the proposed 
changes make the Exchange a more attractive marketplace for market 
participants at other exchanges, such market participants are welcome 
to become market participants on the Exchange.

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 \15\ and Rule 19b-4(f)(2) 
thereunder,\16\ because it establishes or changes a due, or fee.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BOX-2017-24 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-2017-24. 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-2017-24, and should be 
submitted on or before August 11, 2017.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-15321 Filed 7-20-17; 8:45 am]
 BILLING CODE 8011-01-P