82 FR 48302 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule To Adopt a Strategy QOO Order Fee Cap

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 199 (October 17, 2017)

[Federal Register Volume 82, Number 199 (Tuesday, October 17, 2017)]
[Notices]
[Pages 48302-48304]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-22389]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81852; File No. SR-BOX-2017-32]


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

October 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 September 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, 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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[[Page 48303]]

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 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 October 2, 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 establish monthly and daily fee caps for certain manual transactions 
fees on the BOX open-outcry Trading Floor (``Trading Floor''). Manual 
transactions consist of Qualified Open Outcry (``QOO'') Orders.\5\ 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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    \5\ 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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    Specifically, the Exchange proposes to add Section II.D ``Strategy 
QOO Fee Cap'' where manual transactions fees will be capped at $700 for 
all reversal, conversion, jelly roll, and box spread strategies \6\ 
executed on the same trading day in the same option class. QOO Order 
fees in these combined Strategies will further be capped at $25,000 per 
month per Participant. The Exchange then proposes to specify that 
executions subject to the Strategy QOO Order Fee Cap will not be 
subject to the Broker Dealer manual transaction fee cap of $75,000 per 
month in Section II.A, and the QOO Order Rebate outlined in Section 
II.C.
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    \6\ A ``reversal strategy'' is established by combining a short 
security position with a short put and a long call position that 
shares the same strike and expiration. A ``conversion strategy'' is 
established by combining a long position in the underlying security 
with a long put and a short call position that shares the same 
strike and expiration. A ``jelly roll strategy'' is created by 
entering into two separate positions simultaneously. One position 
involves buying a put and selling a call with the same strike price 
and expiration. The second position involves selling a put and 
buying a call, with the same strike price, but with a different 
expiration from the first position. A ``box spread strategy'' is a 
strategy that synthesizes long and short stock positions to create a 
profit. Specifically, a long call and short put at one strike is 
combined with a short call and long put at a different strike to 
create synthetic long and synthetic short stock positions, 
respectively. These definitions are identical to the terms defined 
in the Chicago Board Options Exchange, Inc. (``CBOE'') Fee Schedule; 
NYSE American Options Fee Schedule ``(``NYSE'') and Phlx Pricing 
Schedule (``PHLX''), Strategy Caps on Multiply Listed Options Fees.
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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,\7\ 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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    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed Strategy QOO Order fee cap 
is reasonable and appropriate. The proposed fee cap of $700 per day for 
certain strategies executed on the same trading day in the same option 
class; and $25,000 per month per Participant are the same amount 
strategy fee caps at a competing exchanges with an open outcry trading 
floor.\8\ Further, the Exchange believes that this proposed fee cap is 
equitable and not unfairly discriminatory because it provides 
incentives for all Participants to submit certain strategy orders to 
the BOX Trading Floor, which brings increased liquidity and order flow 
to the floor for the benefit of all market participants. Finally, the 
Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to exempt all transactions subject to the Strategy QOO 
Fee Cap from the Broker Dealer monthly QOO fee cap and the QOO Order 
Rebate as additional incentives for these orders will no longer be 
necessary.
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    \8\ See CBOE Fee Schedule Footnote 13; NYSE Fee Schedule, Limit 
of Fees on Options Strategy Executions on page 18; and Phlx Pricing 
Schedule, Strategy Caps on Multiply Listed Options Fees.
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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. Further, the Exchange does not 
believe that capping the fees for certain Strategy QOO Orders will 
impose an undue burned on intra-market competition because all Floor 
Participants are eligible for the fee cap. Further, the Exchange 
believes that the fee cap will promote competition by allowing the 
Exchange to remain competitive with other exchanges with open outcry 
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 \9\ and Rule 19b-4(f)(2) 
thereunder,\10\ because it establishes or changes a due, or fee.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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

[[Page 48304]]

     Send an email to [email protected]. Please include 
File Number SR-BOX-2017-32 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-2017-32. 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-2017-32, and should be 
submitted on or before November 7, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22389 Filed 10-16-17; 8:45 am]
BILLING CODE 8011-01-P