82 FR 42195 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish Fees and Rebates for the Trading Floor on the BOX Market LLC (“BOX”) Options Facility

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 171 (September 6, 2017)

Page Range		42195-42199
FR Document		2017-18798
Federal Register, Volume 82 Issue 171 (Wednesday, September 6, 2017)
[Federal Register Volume 82, Number 171 (Wednesday, September 6, 2017)]
[Notices]
[Pages 42195-42199]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-18798]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81504; File No. SR-BOX-2017-28]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Establish Fees and Rebates for the Trading Floor on the BOX Market LLC 
(``BOX'') Options Facility

August 30, 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 August 21, 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 to 
establish fees and rebates for the Trading Floor 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 August 22, 2017. 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 create a new fee and rebate structure for manual transactions 
initiated from the BOX Trading Floor. The Exchange recently adopted 
rules to allow for an open outcry Trading Floor.\5\
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    \5\ See Securities Exchange Release No. 81292 (August 2, 2017), 
82 FR 37144 (August 8, 2017)(Order Approving SR-BOX-2016-48 as 
modified by Amendment Nos. 1 and 2).
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    The Exchange represented in its filing with the Securities and 
Exchange Commission (``SEC'' or the ``Commission'') to establish the 
Trading Floor that, ``the Exchange has not yet determined the fees for 
transactions executed on the Trading Floor. Prior to commencing trading 
on the Trading Floor, the Exchange will file proposed fees with the 
Commission.'' \6\ As the Exchange intends to begin trading on the 
Trading Floor on August 22, 2017, it is submitting this filing to 
describe the fees that will be applicable to transactions presented on 
the Trading Floor.
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    \6\ Id.
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Section I. Exchange Fees
    The Exchange proposes to amend the language to the title of Section 
I. to differentiate between electronic transaction fees and manual 
transaction fees. Currently, the Exchange assesses Exchange Fees based 
on transaction types and account types. The Exchange proposes to add 
``Electronic Transaction'' and remove ``Exchange'' to the title of 
Section I to distinguish that Section I fees only apply to transactions 
that are initiated electronically through

[[Page 42196]]

the Trading Host as opposed to transactions initiated and presented on 
the Trading Floor in open outcry (manual transactions).\7\ The Exchange 
also proposes to clarify that a Participant's electronic and manual 
transaction volume will be considered for purposes of calculating the 
volume thresholds within the fee schedule, including the Tiered Volume 
Rebates for Non-Auction Transactions (Section I.A.1), Primary 
Improvement Order fees (Section 1.B.1), and BOX Volume Rebate (Section 
I.B.2). Further, the Exchange proposes to make changes throughout the 
Fee Schedule to distinguish between electronic transaction and manual 
transaction fees.
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    \7\ See BOX Rule 100(a)(66). Electronic transactions are those 
initiated electronically, as opposed to transactions initiated and 
presented on the Trading Floor in open outcry.
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Section II. Manual Transaction Fees
    The Exchange then proposes to adopt a new section (Section II. 
Manual Transaction Fees) and renumber the subsequent sections 
accordingly. As discussed above, manual transactions are transactions 
initiated and presented on the Trading Floor in open outcry, as opposed 
to those initiated electronically. Manual transactions consist of 
Qualified Open Outcry (``QOO'') Orders.\8\ A QOO Order must be entered 
as a two-sided order, an initiating side and a contra-side, and the QOO 
Order fees, rebates and applicable fee and rebate caps will apply to 
both sides of the order.
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    \8\ See BOX Rule 7600. The QOO Order must be entered as a two-
sided order when it is submitted to the Exchange for execution 
through the BOX Order Gateway (``BOG'').
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    Similar to the fees assessed for electronic transactions, the 
Exchange proposes to assess fees for manual transactions based on 
account type. For Public Customers, the Exchange proposes to assess a 
$0.00 per contract fee for manual transactions in Penny and Non-Penny 
Pilot Classes. For Professional Customers, Broker Dealers and Market 
Makers, the Exchange proposes to assess a $0.25 per contract fee for 
manual transactions in Penny and Non-Penny Pilot classes.
    The Exchange proposes to add an additional account type, Broker 
Dealer Facilitating a Public Customer, which will apply to any manual 
transaction executed using the open outcry process, where the Broker 
Dealer and the Public Customer both clear through the same clearing 
firm and the Broker Dealer clears in the customer range. The Exchange 
proposes to assess a $0.00 per contract fee for Broker Dealers 
Facilitating a Public Customer in Penny and Non-Penny Pilot Classes. 
For example, if a Floor Broker presents a QOO Order on the Trading 
Floor where the initiating side is a Public Customer and the contra 
side is the Broker Dealer guaranteeing the full size of the order, the 
Public Customer will be assessed a $0.00 per contract fee on the 
initiating side and the Broker Dealer will be assessed a $0.00 per 
contract fee for the contra-side.
    The Exchange then proposes to establish a QOO Order fee cap for 
Broker Dealers of $75,000 per month per Broker Dealer. Again, the 
Exchange notes that both sides of the paired QOO Order will count 
towards reaching the fee cap for each Broker Dealer.
    The Exchange then proposes to add Section II.B., QOO Orders 
Executed Against Orders on the BOX Book. Specifically, the Exchange 
proposes that the initiating side of a QOO Order executing against an 
order on the BOX Book will be treated as a manual transaction for 
purposes of the Fee Schedule and will be subject to the fees and 
rebates in proposed Section II (Manual Transaction Fees). The 
corresponding order on the BOX Book will be treated as an electronic 
transaction and continue to be subject to the fees in Section I 
(Electronic Transaction Fees).
    The Exchange proposes to adopt Section II.C., QOO Order Rebate. BOX 
Floor Brokers will receive a $0.05 per contract rebate for all QOO 
Orders presented to the Trading Floor for both sides of the QOO Order. 
However, the rebate will not apply to Public Customer manual 
executions; or Broker Dealer manual executions where the Broker Dealer 
is facilitating a Public Customer. The total monthly rebate for Broker 
Dealer executions will be capped at $30,000 per month per Broker 
Dealer.
    For example, Broker Dealer A submits a 200 contract buy order to a 
Floor Broker B, and the Floor Broker B pairs that initiating order with 
Broker Dealer C's 200 contract sell order to create a QOO Order that 
will be presented on the Trading Floor in open outcry. During open 
outcry, Floor Broker D offers to sell 50 contracts on behalf of Broker 
Dealer E. The 200 contract QOO Order is then submitted to the Exchange 
for execution through the BOG.
    Following the allocation of the initiating side of the QOO Order:
     Broker Dealer A would be assessed a $0.25 fee and Floor 
Broker B would receive a $0.05 rebate on the initiating 200 contracts.
     Broker Dealer C would be assessed a $0.25 fee and Floor 
Broker B would receive a $0.05 rebate on its 150 contra side contracts 
that receive allocation.
     Broker Dealer E would be assessed a $0.25 fee and Floor 
Broker D would receive a $0.05 rebate on its 50 contra side contracts 
that received allocation.
    To continue on this example, if Floor Broker D offered to sell 50 
contracts on behalf of Public Customer F instead of Broker Dealer E. 
Public Customer F would be assessed no fees and Floor Broker D would 
receive no rebates on its 50 contra side contracts that received 
allocation. On a monthly basis, these QOO Order fees for Broker Dealer 
A, Broker Dealer C, and Broker Dealer E would each be capped at 
$75,000; and the QOO Order Rebate for Floor Brokers B and D would be 
capped at $30,000 per Broker Dealer.
Proposed Section IV. Complex Order Transaction Fees
    The Exchange proposes to amend proposed Section IV (Complex Order 
Transaction Fees) to clarify that transaction fees and credits set 
forth in this section will not apply to (i) Complex Order Electronic 
transactions executed through the Auction Mechanisms \9\ which will be 
subject to Sections I (Electronic Transaction Fees) and proposed 
Section III (Liquidity Fees and Credits) and (ii) Complex Order Manual 
Transactions which will be subject to proposed Section II (Manual 
Transaction Fees).
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    \9\ BOX's auction mechanisms include the Price Improvement 
Period (``PIP''), Complex Order Price Improvement Period 
(``COPIP''), Facilitation Auction and Solicitation Auction.
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Proposed Section IX. Participant Fees
    The Exchange proposes to establish distinct Participant fees for 
its Floor Participants. The proposed Floor Participant Permit fees will 
be in addition to the Participant Fees already in place; a one-time 
$2,500 Initiation Fee, and a monthly $1,500 Participant Fee. The 
Exchange proposes to establish a Floor Market Maker fee of $5,500 per 
month, a Floor Broker fee of $500 per month and a Badge fee of $100 per 
month.\10\ The Exchange notes that the Floor Market Maker fee and Floor 
Broker fee entitles the Participant to three registered permits on the 
BOX Trading Floor. Further, Badge fees will be paid by each Participant 
(Floor Market Maker or Floor Broker) for any

[[Page 42197]]

registered on-floor person employed by or associated with the 
Participant. Lastly, the Exchange notes that the Badge fee is not 
imposed on permit holders. The Exchange believes these Floor 
Participant Fees are competitive with similar fees at other option 
exchanges.\11\
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    \10\ A Floor Market Maker is an Options Participant of the 
Exchange located on the Trading Floor who has received permission 
from the Exchange to trade in options for his own account. A Floor 
Broker is an individual who is registered with the Exchange for the 
purpose, while on the Trading Floor, of accepting and handling 
options orders. A Floor Broker must be registered as an Options 
Participant prior to registering as a Floor Broker. The Exchange 
notes that the Floor Market Maker fee and the Floor Broker Dealer 
fee will be paid by the Floor Market Maker or Floor Broker Dealer 
entities, respectively.
    \11\ For similar Trading Floor Permits for Floor Market Makers, 
Chicago Board Options Exchange (``CBOE'') charges $5,000; NASDAQ 
PHLX LLC (``PHLX'') charges $4,500; NYSE Arca (``Arca'') charges up 
to $6,000; and NYSE American (``American'') charges up to $10,000. 
For Floor Brokers, CBOE charges $9,000 per month; PHLX charges 
$3,000 per month; Arca charges $500 per month; and American charges 
$500 per month.
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    Finally, the Exchange proposes to make a number of non-substantive 
changes to the Fee Schedule. First, the Exchange proposes to renumber 
the footnotes throughout the Fee Schedule. Second, the Exchange 
proposes to amend Section III (Complex Order Transaction Fees) with 
regard to Market Maker executed volume on BOX. Currently, the Fee 
Schedule states, ``All Complex Order transactions will count toward a 
Market Maker's monthly executed volume on BOX in Section I.B.'' The 
Exchange proposes to correct the reference to Section I.A.1, as Section 
I.B is not accurate. Finally, the Exchange proposes to amend proposed 
Section III (Liquidity Fees and Credits) to clarify that a PIP Order or 
COPIP Order that executes against an Unrelated on the BOX Book shall be 
treated as a Non-Auction Transaction and deemed exempt from the 
Liquidity Fees and Credits in Section III.
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,\12\ 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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    \12\ 15 U.S.C. 78f(b)(4) and (5).
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Manual Transaction Fees
    The Exchange believes the proposed fees for Manual Transactions on 
the Trading Floor are reasonable. Furthermore, several other competing 
exchanges have open outcry trading floors and market participants can 
readily direct order flow to any these venues if they deem BOX's manual 
transaction fees to be excessive.\13\
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    \13\ See CBOE Fee Schedule; PHLX Pricing Schedule; Arca Options 
Fees and Charges; and American Options Fee Schedule.
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    The Exchange believes the $0.25 fee for Professional Customer, 
Broker Dealer, and Market Maker QOO Orders is reasonable. The proposed 
fees for these Manual transactions have been designed to be comparable 
to the fees that such orders would be charged at competing venues.\14\ 
Further, the Exchange believes that charging Professionals, Broker 
Dealers and Market Makers the same fee for all Manual Transactions is 
not unfairly discriminatory as the fees for QOO Orders are the same for 
Professionals, Broker Dealers and Market Makers.
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    \14\ For manual transactions, CBOE charges Broker Dealers $0.25 
and charges Market Makers between $0.23 and $0.03, depending on 
their volume thresholds based on total national Market Maker volume. 
CBOE does not charge public customers for manual transactions. On 
Phlx, Broker Dealers and Professionals are charged $0.25 for floor 
transactions while Market Makers are charged $0.35. Similar to CBOE, 
Phlx does not charge public customers for their floor transactions. 
On Arca, Broker Dealers, Professional Customers and Market Makers 
are charged $0.25 for their manual executions, while public 
customers are not charged. Lastly, on American for manual 
transactions, Broker Dealers and Professional Customers are charged 
$0.25, Market Makers are charged $0.20, and public customers are not 
charged.
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    The Exchange believes it is equitable and not unfairly 
discriminatory that Public Customers be charged lower fees for Manual 
transactions than Professional Customers, Broker Dealers and Market 
Makers on BOX. 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 customer benefit. As 
such, the Exchange believes that not assessing a fee for Public 
Customer Manual transactions are appropriate, equitable and not 
unfairly discriminatory. The Exchange believes it promotes the best 
interests of investors to have lower transaction costs for Public 
Customers, and having no fee for QOO Orders will attract Public 
Customer order flow to the BOX Trading Floor.
    The Exchange believes that not charging a Broker Dealer 
facilitating a Public Customer is reasonable because it will encourage 
Broker Dealers to facilitate Public Customer orders through the Trading 
Floor and increase participation in open outcry, which will in turn 
promote increased executions on the Exchange which will benefit all BOX 
Participants. As stated above, BOX's market model and fees are 
generally intended to benefit retail customers by providing incentives 
for Participants to submit their customer order flow to BOX.\15\ 
Further, the Exchange believes this proposal is reasonable and 
appropriate; as it is in line other exchanges with open outcry trading 
floors.\16\
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    \15\ See BOX Fee Schedule, current Section II.A. (Liquidity Fees 
and Credits for PIP and COPIP Transactions.)
    \16\ See NYSE Arca Fee Schedule. Arca does not charge fees for 
manual executions for Firm Facilitation and Broker Dealers 
facilitating a Customer. Additionally, the Exchange notes that it is 
proposing a similar definition for ``Broker Dealers facilitating a 
Customer'' as defined in Arca's Fee Schedule. See also NASDAQ PHLX 
LLC (``PHLX'') Fee Schedule. PHLX does not charge fees for a 
transaction in which a Broker-Dealer facilitates a Customer order.
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    In addition, the proposed change is equitable and not unfairly 
discriminatory because it is open to all Broker Dealers on an equal 
basis. Further, the BOX Trading Floor will provide the opportunity for 
all market participants to compete for these customer orders, as there 
are no limitations regarding the number of Market Makers or Floor 
Brokers that can participate and compete for a QOO Order in open 
outcry.
    Finally, the Exchange believes that the proposed difference between 
what a Broker Dealer facilitating a Public Customer will pay, compared 
to what a responder to the QOO Order will pay is reasonable, equitable 
and not unfairly discriminatory. As stated above, this difference is 
in-line with the credits and fees at competing exchanges. The Exchange 
believes that this differential is reasonable because responders are 
willing to pay a higher fee for liquidity discovery. Further, the 
Broker Dealer is guaranteeing the execution when submitting the QOO 
Order to floor, compared to the other Floor Participants who have no 
obligation to respond.
    The Exchange believes that the QOO Order fee cap for Broker Dealers 
is reasonable and appropriate. The proposed fee cap of $75,000 per 
month per Broker Dealer is the same amount as another fee cap at a 
competing exchange with an open outcry trading floor.\17\ Further, the 
Exchange believes that this proposed fee cap is equitable and not 
unfairly discriminatory because it provides incentives for Broker 
Dealers to submit floor transactions on the Exchange, which brings 
increased liquidity and order flow to the floor for the benefit of all 
market participants. Lastly, the Exchange believes that applying this 
fee cap to only Broker Dealers is reasonable and appropriate as another 
exchange in the industry has a similar cap.\18\ The Exchange believes

[[Page 42198]]

that to attract orders from Broker Dealers, via a Floor Broker, the 
rates must be competitive with rates at other trading floors.
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    \17\ See Phlx Pricing Schedule. Phlx subjects Firms to a maximum 
fee of $75,000 per month for floor transactions.
    \18\ See American Fee Schedule Section I.I (Firm Month Fee Cap). 
American has a monthly Firm Fee Cap for Manual transactions of 
$100,000. Firms are defined as ``a Broker Dealer that is not 
registered as a dealer-specialist or Market Maker that is an ATP 
Holder on the Exchange.'' The Exchange notes that American has in 
place a $0.01 incremental service fee that is applied once a Firm 
has reached the monthly cap. The Exchange is not proposing a similar 
service fee at this time. See also Arca Fee Schedule (Firm and 
Broker Dealer Monthly Fee Cap).
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    Further, the Exchange believes that applying the cap to only Broker 
Dealers is equitable and not unfairly discriminatory to Public 
Customers and Broker Dealers facilitating a Public Customer because 
these Participants are not charged any fees for their manual 
transactions. Additionally, the Exchange believes it is equitable and 
not unfairly discriminatory to not apply a fee cap on Floor Market 
Maker manual transactions. Market Makers do not need the same 
incentives as Broker Dealers to submit order flow to the BOX Trading 
Floor. Broker Dealers require a Floor Broker to represent their trading 
interest on the Trading Floor as compared to a Market Maker that could 
directly transact such orders on the Trading Floor.
QOO Order Rebate
    The Exchange believes that the proposed $0.05 QOO Order Rebate for 
Floor Brokers is reasonable, equitable and not unfairly discriminatory. 
The Exchange notes that it does not offer a front-end for order entry 
on the Trading Floor, unlike some competing exchanges. As such, the 
Exchange believes it is necessary from a competitive standpoint to 
offer this rebate to the executing Floor Broker on a QOO order. A 
similar flat rebate is offered to Floor Brokers on a competing 
exchange.\19\ Similar to the Floor Broker Rebate for Executed QCC 
Transactions, the proposed QOO Order rebate is applied to both sides of 
the paired order and is directed to the Floor Broker and not to the 
Participant who is assessed the QOO Order fee. In other words, the NYSE 
Floor Broker Rebate is applied to the Floor Broker who executes the QCC 
Order for another NYSE Member, even though that Member is assessed the 
$0.20 fee per contract. Finally, the rebate is only applied when the 
Floor Broker executes the QCC Order manually on the NYSE Arca trading 
floor. No rebate is given when the QCC Order is executed 
electronically.\20\
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    \19\ See NYSE Arca, Qualified Contingent Cross (``QCC'') 
Transactions Fees and Rebate. The Floor Broker Rebate for Executed 
Orders is a flat rebate and is applied to both sides of the QCC 
Order except when a Customer is on both sides of the QCC 
transaction.
    \20\ BOX notes that while QCC Orders are also offered on the 
Exchange, only QOO Orders are allowed to be presented to the BOX 
Trading Floor for open outcry.
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    The Exchange notes that Participants have two possible means of 
bringing orders to the Exchange's Trading Floor for possible execution: 
(1) They can invest in the technology, systems and personnel to 
participate on the Trading Floor and deliver the order to the Exchange 
matching engines for validation and execution; or (2) they can utilize 
the services of another Participant acting as a Floor Broker. The 
Exchange believes that offering the rebate will allow Floor Brokers to 
price their services at a level that would enable them to attract QOO 
order flow from participants who would otherwise utilize the front-end 
order entry mechanism offered by the Exchange's competitors instead of 
incurring the cost in time and resources to install and develop their 
own internal systems to deliver QOO orders directly to the Exchange 
system.
    Further, the Exchange believes that to the extent Floor Brokers are 
able to attract QOO orders; they will gain important information that 
would allow them to solicit the parties to the QOO orders for 
participation in other trades. This will in turn, benefit other 
Exchange participants through additional liquidity on the Trading Floor 
that could occur as a result.
    The Exchange believes it is equitable and not unfairly 
discriminatory to only apply the rebate to Floor Brokers and not to 
Floor Market Makers. As stated above, Floor Market Makers only 
represent their own interest on the Trading Floor and therefore do not 
need a similar incentive. Further, the Exchange believes it is 
equitable and not unfairly discriminatory to not apply the rebate to 
Public Customers or Broker Dealers where the Broker Dealer is 
facilitating a Public Customer, as these executions are not assessed a 
fee for their QOO Orders. The Exchange also believes that the $30,000 
rebate cap for Broker Dealer executions is equitable and not unfairly 
discriminatory as Broker Dealer QOO Order execution fees are capped at 
$75,000 per month and other QOO Order fees are not.
QOO Orders Executed on the BOX Book
    The Exchange believes that treating the initiating side of the QOO 
Order that executes against an order on the BOX Book as a manual 
transaction for purposes of the Fee Schedule and subject to Section II 
(Manual Transaction Fees), and treating the corresponding order on the 
BOX Book as an electronic transaction subject to Section I (Electronic 
Transaction Fees) is reasonable, equitable and not unfairly 
discriminatory. For example, the Exchange believes this proposal is 
reasonable and appropriate as it has adopted a similar methodology for 
Complex Orders that execute against orders on the BOX Book.\21\ 
Further, the Exchange believes that this proposed change is equitable 
and not unfairly discriminatory as it will reduce investor confusion 
with respect to the applicable QOO Order fees and rebates. Further, the 
Exchange believes that this proposal is consistent with what a 
Participant submitting an order on the Trading Floor would expect to 
pay, which will allow the Participant to more accurately forecast their 
floor based transaction fees.
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    \21\ See Securities Exchange Release No. 77568 (April 8, 2016), 
81 FR 22151 (April 14, 2016).
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Complex Order Transaction Fees
    The Exchange believes that the proposed changes to Proposed Section 
IV (Complex Order Transaction Fees) are reasonable, equitable and not 
unfairly discriminatory as the changes are simply clarifying how Manual 
Complex Orders on the Trading Floor will be charged or credited as 
opposed to electronic Complex Orders. The Exchange notes that the 
Exchange currently differentiates between Complex Orders executed on 
the Exchange versus Complex Orders executed within BOX's Auction 
Mechanisms. The Exchange is simply clarifying that Manual Complex 
Orders presented on the Trading Floor will be subject to a different 
section of the BOX Fee Schedule, specifically proposed Section II 
(Manual Transaction Fees).
Participant Fees
    The Exchange's proposed Trading Floor Permit fees of $5,500 per 
month for Floor Market Makers, $500 per month for Floor Brokers and 
$100 per month for any Badge Fees are reasonable and appropriate. 
Specifically, the proposed fees are competitive with similar 
participant fees at other options exchanges with open outcry trading 
floors.\22\
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    \22\ See supra note 11.
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    The Exchange believes that it is equitable and not unfairly 
discriminatory to charge Floor Market Makers more per month than Floor 
Brokers. Floor Market Makers benefit from the access they have to 
interact with orders which are made available in open outcry on the 
Trading Floor. As

[[Page 42199]]

stated above, these market participants may choose to conduct their 
business on the Trading Floor, unlike Floor Brokers, who have a 
business model that is naturally tied to the physical trading space. 
The Exchange offers Market Makers a choice on how to conduct business, 
only electronic or floor and electronic. The Exchange believes that it 
is equitable and not unfairly discriminatory to assess Floor Market 
Makers the higher monthly fee because they have the benefit of trading 
on both if they so choose.
    Lastly, the Exchange believes the monthly Badge Fee of $100 is 
reasonable as it is in line with other similar fees at a competing 
exchange.\23\ Further, the Exchange believes that the monthly Badge Fee 
is equitable and not unfairly discriminatory because the Badge Fee will 
be assessed uniformly to each person authorized by the BOX Participant, 
regardless of Participant type.
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    \23\ See CBOE Fees Schedule and NYSE Arca Fee Schedule. CBOE 
charges a $120 (Floor Manager) or $60 (Clerks) badge fees for their 
Floor Participants. NYSE Arca charges $50 per badge.
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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 notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges. Because competitors are free to modify their own fees in 
response, the Exchange believes that the degree to which fee changes in 
this market may impose any burden on competition is limited. For the 
reasons discussed above, the Exchange believes that the proposed 
changes do not impose an undue burden on competition.
    The Exchange does not believe that assessing no fee on Broker 
Dealers facilitating Public Customer will burden competition by 
creating such a disparity between the fees that an initiating Broker 
Dealer pays and the fees a competitive responder pays that would result 
in certain Participants being unable to compete with initiators. In 
fact, the Exchange believes that the proposed fees will not impair 
these Participants from adding liquidity and competing in open outcry 
on the Trading Floor and will help promote competition by providing 
incentives for market participants to submit customer order flow to the 
BOX Trading Floor and thus, create a greater opportunity for customer 
executions.
    Further, the Exchange does not believe that offering a rebate to 
Floor Brokers will impose an undue burned [sic] on intra-market 
competition because all Floor Brokers are eligible to transaction [sic] 
QOO Orders and receive a rebate. Further, the Exchange believes that 
the rebate will promote competition by allowing Floor Brokers to 
competitively price their services and for the Exchange to remain 
competitive with other exchanges that offer front-end order entry on 
their trading floors.

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 \24\ and Rule 19b-4(f)(2) 
thereunder,\25\ because it establishes or changes a due, or fee.
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    \24\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \25\ 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-2017-28 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-2017-28. 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-2017-28, and should be 
submitted on or before September 27, 2017.
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-18798 Filed 9-5-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 42195

subject to Sections 55 through 65 of the Please direct your written comments Reference Room and also on the
Investment Company Act of 1940 (15 to Pamela Dyson, Director/Chief Exchange’s Internet Web site at http://
U.S.C. 80a–1 et seq.) (‘‘1940 Act’’). Information Officer, Securities and boxexchange.com.
Certain companies may have to make a Exchange Commission, C/O Remi
II. Self-Regulatory Organization’s
filing with the Commission before they Pavlik-Simon, 100 F Street NE.,
Washington, DC 20549; or send an email Statement of the Purpose of, and
are ready to elect to be regulated as a
to: PRA_Mailbox@sec.gov. Statutory Basis for, the Proposed Rule
business development company.1 A
Change
company that is excluded from the Dated: August 31, 2017.
definition of ‘‘investment company’’ by In its filing with the Commission, the
Eduardo A. Aleman,
Section 3(c)(1) because it has fewer than Exchange included statements
Assistant Secretary.
one hundred shareholders and is not concerning the purpose of and basis for
[FR Doc. 2017–18859 Filed 9–5–17; 8:45 am] the proposed rule change and discussed
making a public offering of its securities
BILLING CODE 8011–01–P any comments it received on the
may lose such an exclusion solely
because it proposes to make a public proposed rule change. The text of these
offering of securities as a business statements may be examined at the
SECURITIES AND EXCHANGE
development company. Such company, places specified in Item IV below. The
COMMISSION
under certain conditions, would not Exchange has prepared summaries, set
lose its exclusion if it notifies the [Release No. 34–81504; File No. SR–BOX– forth in Sections A, B, and C below, of
Commission on Form N–6F of its intent 2017–28] the most significant aspects of such
to make an election to be regulated as statements.
Self-Regulatory Organizations; BOX
a business development company. The A. Self-Regulatory Organization’s
Options Exchange LLC; Notice of
company only has to file a Form N–6F Filing and Immediate Effectiveness of Statement of the Purpose of, and
once. a Proposed Rule Change To Establish Statutory Basis for, the Proposed Rule
The Commission estimates that on Fees and Rebates for the Trading Floor Change
average approximately 12 companies on the BOX Market LLC (‘‘BOX’’)
file these notifications each year. Each 1. Purpose
Options Facility
of those companies need only make a The Exchange proposes to amend the
single filing of Form N–6F. The August 30, 2017. Fee Schedule for trading on BOX to
Commission further estimates that this Pursuant to Section 19(b)(1) of the create a new fee and rebate structure for
information collection imposes burden Securities Exchange Act of 1934 (the manual transactions initiated from the
of 0.5 hours, resulting in a total annual ‘‘Act’’),1 and Rule 19b–4 thereunder,2 BOX Trading Floor. The Exchange
PRA burden of 6 hours. Based on the notice is hereby given that on August recently adopted rules to allow for an
estimated wage rate, the total cost to the 21, 2017, BOX Options Exchange LLC open outcry Trading Floor.5
industry of the hour burden for (the ‘‘Exchange’’) filed with the The Exchange represented in its filing
complying with Form N–6F would be Securities and Exchange Commission with the Securities and Exchange
approximately $2,070. (‘‘Commission’’) the proposed rule Commission (‘‘SEC’’ or the
The collection of information under change as described in Items I, II, and ‘‘Commission’’) to establish the Trading
Form N–6F is mandatory. The III below, which Items have been Floor that, ‘‘the Exchange has not yet
information provided under the form is prepared by the Exchange. The determined the fees for transactions
not kept confidential. An agency may Exchange filed the proposed rule change executed on the Trading Floor. Prior to
not conduct or sponsor, and a person is pursuant to Section 19(b)(3)(A)(ii) of the commencing trading on the Trading
not required to respond to, a collection Act,3 and Rule 19b–4(f)(2) thereunder,4 Floor, the Exchange will file proposed
of information unless it displays a which renders the proposal effective fees with the Commission.’’ 6 As the
currently valid OMB control number. upon filing with the Commission. The Exchange intends to begin trading on
Written comments are invited on: (a) Commission is publishing this notice to the Trading Floor on August 22, 2017,
Whether the proposed collection of solicit comments on the proposed rule it is submitting this filing to describe the
information is necessary for the proper change from interested persons. fees that will be applicable to
performance of the functions of the I. Self-Regulatory Organization’s transactions presented on the Trading
agency, including whether the Statement of the Terms of the Substance Floor.
information will have practical utility; of the Proposed Rule Change
(b) the accuracy of the agency’s estimate Section I. Exchange Fees
of the burden of the collection of The Exchange is filing with the The Exchange proposes to amend the
information; (c) ways to enhance the Securities and Exchange Commission language to the title of Section I. to
quality, utility, and clarity of the (‘‘Commission’’) a proposed rule change differentiate between electronic
information collected; and (d) ways to to amend the Fee Schedule to establish transaction fees and manual transaction
minimize the burden of the collection of fees and rebates for the Trading Floor on fees. Currently, the Exchange assesses
information on respondents, including the BOX Market LLC (‘‘BOX’’) options Exchange Fees based on transaction
through the use of automated collection facility. While changes to the fee types and account types. The Exchange
techniques or other forms of information schedule pursuant to this proposal will proposes to add ‘‘Electronic
technology. Consideration will be given be effective upon filing, the changes will Transaction’’ and remove ‘‘Exchange’’ to
asabaliauskas on DSKBBXCHB2PROD with NOTICES

to comments and suggestions submitted become operative on August 22, 2017. the title of Section I to distinguish that
in writing within 60 days of this The text of the proposed rule change is Section I fees only apply to transactions
publication. available from the principal office of the that are initiated electronically through
Exchange, at the Commission’s Public
1 A company might not be prepared to elect to be 5 See Securities Exchange Release No. 81292
1 15 U.S.C. 78s(b)(1).
subject to Sections 55 through 65 of the 1940 Act (August 2, 2017), 82 FR 37144 (August 8,
2 17 CFR 240.19b–4.
because its capital structure or management 2017)(Order Approving SR–BOX–2016–48 as
3 15 U.S.C. 78s(b)(3)(A)(ii). modified by Amendment Nos. 1 and 2).
compensation plan is not yet in compliance with
the requirements of those sections. 4 17 CFR 240.19b–4(f)(2). 6 Id.

VerDate Sep<11>2014 17:37 Sep 05, 2017 Jkt 241001 PO 00000 Frm 00140 Fmt 4703 Sfmt 4703 E:\FR\FM\06SEN1.SGM 06SEN1
Document Created: 2017-09-06 00:56:36
Document Modified: 2017-09-06 00:56:36
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		82 FR 42195