83 FR 25079 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change To Adopt IM-7130-1 to Rule 7130
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 105 (May 31, 2018)
Federal Register Volume 83, Issue 105 (May 31, 2018)
| Page Range | 25079-25081 | |
| FR Document | 2018-11608 |
[Federal Register Volume 83, Number 105 (Thursday, May 31, 2018)] [Notices] [Pages 25079-25081] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-11608] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83318; File No. SR-BOX-2018-18] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change To Adopt IM-7130-1 to Rule 7130 May 24, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on May 16, 2018, BOX Options Exchange LLC (``BOX'' or ``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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt IM-7130-1 to Rule 7130. 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 website at http://boxoptions.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 The Exchange proposes to adopt IM-7130-1 to Rule 7130 to provide that the Exchange may make available certain [[Page 25080]] BOX Book \3\ information to Participants upon request. Specifically, Participants may inquire with the Exchange as to the amount of any priority interest on the BOX Book.\4\ This information is for advisory purposes only and will be provided on a best efforts basis verbally.\5\ For the purposes of the proposed rule, ``priority interest'' is the number of Public Customer contracts and Non-Public Customer contracts that are ranked ahead of such Public Customer contracts at a given price for a specific option class. Floor Brokers may inquire with an Options Exchange Official or his or her designee. All other Participants may contact the MOC.\6\ --------------------------------------------------------------------------- \3\ The term ``BOX Book'' means the electronic book of orders on each single option series maintained by the BOX Trading Host. See Rule 100(a)(10). \4\ The proposed change is similar to the floor procedures of NYSE Arca (``Arca''). See Arca Regulatory Bulletin RB-16-04 (February 19, 2016). Floor Brokers on NYSE Arca may inquire at with the Trading Official at the post to the amount of any priority interest on NYSE Arca's electronic book. The Exchange notes that there are a few minor differences between the floor procedure of NYSE Arca and the proposed rule. Specifically, the Exchange is proposing to make the proposed information available to all Participants, not only Floor Brokers. The Exchange believes this difference is reasonable because the Exchange is providing the information to all Participants and therefore the Exchange is not discriminating against any type of Participant. Further, the proposed rule provides additional clarity and specificity as to how the information is provided and what is included. The Exchange believes this difference is reasonable because the Exchange is providing greater clarity to Participants which removes the potential for any confusion. Additionally, the MIAX Order Feed offers similar information to subscribers of the data feed. Specifically, the MIAX Order Feed provides real-time data including the limit price, origin, and side of each order for the entire order book to its users. See Securities Exchange Act Release No. 74759 (April 17, 2018), 82 FR 22749 (April 23, 2015)(SR-MIAX-2015-28). The Exchange notes that there are a few differences between the proposal and the MIAX Order Feed. First, the MIAX Order Feed provides the limit price, origin, and size of every order on the entire order book while the Exchange is proposing to only provide the amount of priority interest. The Exchange believes this is a reasonable difference because the Exchange is providing a limited amount of relevant information to Participants executing orders. Specifically, as explained in greater detail below, the proposed information is useful for Floor Brokers executing QOO Orders from the Trading Floor. Additionally, given the manual nature of providing the proposed information, it is reasonable to limit the quantity of information provided to Participants. Second, the MIAX Order Feed is a continuous data feed while the Exchange is proposing to provide the information verbally in response to one off requests. The Exchange believes that this difference is reasonable because it allows the Exchange to provide a limited amount of information in an efficient manner without using substantial Exchange resources. \5\ An Options Exchange Official will provide the requested information when doing so does not interfere with their regulatory responsibilities. Further, the BOX Book is continuously being updated through the actions of other market participants; therefore, there is no guarantee that the information provided will remain accurate once verbally communicated. \6\ The term ``Market Operations Center'' or ``MOC'' means the BOX Market Operations Center, which provides market support for Options Participants during the trading day. See Rule 100(a)(32). --------------------------------------------------------------------------- The Exchange is proposing to offer this information at no cost to Participants. The process of providing the requested information to Participants is manual in nature.\7\ An Options Exchange Official or his or her designee, or the MOC, may provide this information to Participants upon request. The Exchange notes that any information will be provided on an anonymous basis. --------------------------------------------------------------------------- \7\ Participants must request this information each time; the Exchange will not provide continuous updated information. --------------------------------------------------------------------------- The proposed change will provide additional visibility to the BOX Book for Participants looking to execute orders on the Exchange. For example, a Floor Broker sourcing liquidity could use this information as another means for probing the market. Specifically, since the initiating side \8\ of a Qualified Open Outcry Order (``QOO Order'') \9\ will match with Public Customer Orders on the BOX Book and any other orders or quotes ranked ahead of such Public Customer Orders at the execution price first,\10\ this information is a valuable piece in understanding the total liquidity available. By providing the amount of priority interest on the BOX Book to a Floor Broker, the Floor Broker will be able to determine the number of contracts on the BOX Book that will be able to match with the initiating side. Further, this will provide certainty to the Floor Broker of the number of contracts that must be located from additional liquidity sources in order to execute a QOO Order. Additionally, knowing the amount of priority interest will provide a Floor Broker with the number of contracts that the Floor Broker must sweep in order to execute a QOO Order when there is resting Public Customer interest at the execution price of the QOO Order.\11\ Other Participants may also find this information useful in determining the composition of liquidity on the Exchange's Book. --------------------------------------------------------------------------- \8\ A QOO Order has two sides; the initiating side and the contra-side. The initiating side is the order which must be filled in its entirety. The contra-side must guarantee the full size of the initiating side of the QOO Order and may provide a book sweep size as provided in Rule 7600(h). See Rule 7600(a)(1). \9\ A QOO Order is a two-sided order that is used by Floor Brokers to execute transactions from the Trading Floor. See Rule 7600. \10\ See Rule 7600(d)(2). \11\ The executing Floor Broker could send an order to clear out the priority interest or use the book sweep size feature as provided in Rule 7600(h). The Exchange notes that the book sweep size feature will only help the Floor Broker clear priority interest on the contra-side of the QOO Order because the initiating side of a QOO Order must be executed in its entirety. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \12\ in general, and furthers the objectives of Section 6(b)(5) of the Act \13\ in particular, in that it is designed to promote just and equitable principles of trade, 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 the proposed rule change is consistent with the offerings of other options exchanges.\14\ --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). \14\ See supra note 4. --------------------------------------------------------------------------- The Exchange believes that the proposed change removes impediments to and perfects the mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest by providing increased transparency to Participants. The Exchange believes the proposed change will enhance a Floor Broker's ability to execute QOO Orders, leading to increased executions on the Exchange. The Exchange believes the proposed change will lead to increased interaction with the BOX Book because Floor Brokers will be aware of the amount of liquidity available on the BOX Book that may interact with their QOO Order and may choose to use such liquidity when executing orders from the Trading Floor or use a separate order to sweep that interest. As such, the proposed change has the potential to provide more liquidity on the Exchange to the benefit of all market participants. Additionally, the Exchange believes that the proposed change will be a valuable tool for all Participants probing the market by providing greater clarity on the composition and availability of liquidity. As such, the Exchange believes that the proposed change will benefit all market participants because it will provide the opportunity for increased BOX Book interaction. The Exchange believes that providing the proposed information is fair, reasonable and not unfairly discriminatory. The proposed information is available to all Participants regardless of whether the Participant accesses the Exchange electronically or has a presence on the Trading Floor. [[Page 25081]] B. Self-Regulatory Organization's Statement on Burden on Competition The proposed change would allow the Exchange to provide Participants with certain information. As discussed above, the proposed change aligns the rules of the Exchange with the floor procedures and rules of other options exchanges \15\ and will allow the Exchange to compete with these other options exchanges. The Exchange believes it will help Participants at the Exchange to compete for executions against market participants at other exchanges by providing an additional tool to the Participants on BOX. This, in turn, helps the Exchange compete against other exchanges in a deeply competitive landscape. As such, 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 --------------------------------------------------------------------------- \15\ See supra note 4. --------------------------------------------------------------------------- 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BOX-2018-18 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-2018-18. 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 website (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 website 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BOX-2018-18 and should be submitted on or before June 21, 2018. --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-11608 Filed 5-30-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 105 / Thursday, May 31, 2018 / Notices 25079
securities that the Exchange proposes to Paper Comments SECURITIES AND EXCHANGE
exclude (i.e., Managed Fund Shares and COMMISSION
Managed Trust Shares) have similar • Send paper comments in triplicate
characteristics to the categories of to Secretary, Securities and Exchange
[Release No. 34–83318; File No. SR–BOX–
securities that are already excluded on Commission, 100 F Street NE, 2018–18]
other national securities exchanges. Washington, DC 20549–1090.
Therefore, the Exchange does not All submissions should refer to File Self-Regulatory Organizations; BOX
believe that it will impose any burden Number SR–NYSEArca–2018–31. This Options Exchange LLC; Notice of
on competition to exclude them. file number should be included on the Filing of Proposed Rule Change To
subject line if email is used. To help the Adopt IM–7130–1 to Rule 7130
C. Self-Regulatory Organization’s
Statement on Comments on the Commission process and review your May 24, 2018.
Proposed Rule Change Received From comments more efficiently, please use
Members, Participants, or Others only one method. The Commission will Pursuant to Section 19(b)(1) of the
post all comments on the Commission’s Securities Exchange Act of 1934
No written comments were solicited (‘‘Act’’),1 and Rule 19b–4 thereunder,2
or received with respect to the proposed internet website (http://www.sec.gov/
notice is hereby given that on May 16,
rule change. rules/sro.shtml). Copies of the
2018, BOX Options Exchange LLC
submission, all subsequent
III. Date of Effectiveness of the (‘‘BOX’’ or ‘‘Exchange’’) filed with the
amendments, all written statements
Proposed Rule Change and Timing for Securities and Exchange Commission
with respect to the proposed rule (‘‘Commission’’) the proposed rule
Commission Action change that are filed with the change as described in Items I and II
Because the foregoing proposed rule Commission, and all written below, which Items have been prepared
change does not: communications relating to the by the self-regulatory organization. The
(i) Significantly affect the protection proposed rule change between the Commission is publishing this notice to
of investors or the public interest; Commission and any person, other than solicit comments on the proposed rule
(ii) impose any significant burden on those that may be withheld from the change from interested persons.
competition; and public in accordance with the
(iii) become operative for 30 days provisions of 5 U.S.C. 552, will be I. Self-Regulatory Organization’s
from the date on which it was filed, or available for website viewing and Statement of the Terms of Substance of
such shorter time as the Commission the Proposed Rule Change
printing in the Commission’s Public
may designate, it has become effective Reference Room, 100 F Street NE, The Exchange proposes to adopt IM–
pursuant to Section 19(b)(3)(A) of the Washington, DC 20549 on official 7130–1 to Rule 7130. The text of the
Act 14 and subparagraph (f)(6) of Rule business days between the hours of proposed rule change is available from
19b–4 thereunder.15 10:00 a.m. and 3:00 p.m. Copies of the the principal office of the Exchange, at
At any time within 60 days of the
filing also will be available for the Commission’s Public Reference
filing of the proposed rule change, the
inspection and copying at the principal Room and also on the Exchange’s
Commission summarily may
office of the Exchange. All comments internet website at http://
temporarily suspend such rule change if
received will be posted without change. boxoptions.com.
it appears to the Commission that such
action is necessary or appropriate in the Persons submitting comments are II. Self-Regulatory Organization’s
public interest, for the protection of cautioned that we do not redact or edit Statement of the Purpose of, and
investors, or otherwise in furtherance of personal identifying information from Statutory Basis for, the Proposed Rule
the purposes of the Act. comment submissions. You should Change
submit only information that you wish
IV. Solicitation of Comments to make available publicly. All In its filing with the Commission, the
Interested persons are invited to submissions should refer to File self-regulatory organization included
submit written data, views, and Number SR–NYSEArca–2018–31 and statements concerning the purpose of,
arguments concerning the foregoing, should be submitted on or before June and basis for, the proposed rule change
including whether the proposed rule 21, 2018. and discussed any comments it received
change is consistent with the Act. on the proposed rule change. The text
For the Commission, by the Division of of these statements may be examined at
Comments may be submitted by any of Trading and Markets, pursuant to delegated
the following methods: the places specified in Item IV below.
authority.16 The self-regulatory organization has
Electronic Comments Eduardo A. Aleman, prepared summaries, set forth in
• Use the Commission’s internet Assistant Secretary. Sections A, B, and C below, of the most
comment form (http://www.sec.gov/ [FR Doc. 2018–11614 Filed 5–30–18; 8:45 am] significant aspects of such statements.
rules/sro.shtml); or BILLING CODE 8011–01–P A. Self-Regulatory Organization’s
• Send an email to rule-comments@ Statement of the Purpose of, and
sec.gov. Please include File Number SR– Statutory Basis for, the Proposed Rule
NYSEArca–2018–31 on the subject line. Change
1. Purpose
amozie on DSK3GDR082PROD with NOTICES1
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give The Exchange proposes to adopt IM–
the Commission written notice of its intent to file 7130–1 to Rule 7130 to provide that the
the proposed rule change at least five business days Exchange may make available certain
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
1 15 U.S.C. 78s(b)(1).
Commission. The Exchange has satisfied this
requirement. 16 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 83, No. 105 / Thursday, May 31, 2018 / Notices 25081
B. Self-Regulatory Organization’s Paper Comments SECURITIES AND EXCHANGE
Statement on Burden on Competition COMMISSION
• Send paper comments in triplicate
The proposed change would allow the to Secretary, Securities and Exchange
Exchange to provide Participants with [Release No. 34–83326; File No. SR–OCC–
Commission, 100 F Street NE,
certain information. As discussed above, 2017–022]
Washington, DC 20549–1090.
the proposed change aligns the rules of
the Exchange with the floor procedures All submissions should refer to File Self-Regulatory Organizations; The
and rules of other options exchanges 15 Number SR–BOX–2018–18. This file Options Clearing Corporation; Order
and will allow the Exchange to compete number should be included on the Approving Proposed Rule Change
with these other options exchanges. The subject line if email is used. To help the Related to The Options Clearing
Exchange believes it will help Commission process and review your Corporation’s Margin Methodology
Participants at the Exchange to compete comments more efficiently, please use
for executions against market May 24, 2018.
only one method. The Commission will
participants at other exchanges by post all comments on the Commission’s I. Introduction
providing an additional tool to the internet website (http://www.sec.gov/
Participants on BOX. This, in turn, rules/sro.shtml). Copies of the On November 13, 2017, The Options
helps the Exchange compete against Clearing Corporation (‘‘OCC’’) filed with
submission, all subsequent
other exchanges in a deeply competitive the Securities and Exchange
amendments, all written statements
landscape. As such, the Exchange does Commission (‘‘Commission’’) the
not believe that the proposed rule with respect to the proposed rule
proposed rule change SR–OCC–2017–
change will impose any burden on change that are filed with the
022 (‘‘Proposed Rule Change’’) pursuant
competition not necessary or Commission, and all written
to Section 19(b) of the Securities
appropriate in furtherance of the communications relating to the
Exchange Act of 1934 (‘‘Act’’),1 and
purposes of the Act proposed rule change between the Rule 19b–4 2 thereunder to propose
Commission and any person, other than several enhancements to OCC’s margin
C. Self-Regulatory Organization’s those that may be withheld from the
Statement on Comments on the methodology, the System for Theoretical
public in accordance with the Analysis and Numerical Simulations
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be
Members, Participants, or Others (‘‘STANS’’), OCC’s proprietary risk
available for website viewing and management system that calculates
The Exchange has neither solicited printing in the Commission’s Public clearing member margin requirements.3
nor received comments on the proposed Reference Room, 100 F Street NE, The proposed changes would modify
rule change. Washington, DC 20549, on official OCC’s margin methodology to: (1)
III. Date of Effectiveness of the business days between the hours of Obtain daily price data for equity
Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of the products (including daily corporate
Commission Action filing also will be available for action-adjusted returns of equities
Within 45 days of the date of inspection and copying at the principal where prices and thus returns of
publication of this notice in the Federal office of the Exchange. All comments securities are adjusted for any dividends
Register or within such longer period received will be posted without change. issued, stock splits, etc.) for use in the
up to 90 days (i) as the Commission may Persons submitting comments are daily estimation of econometric model
designate if it finds such longer period cautioned that we do not redact or edit parameters; (2) enhance its econometric
to be appropriate and publishes its personal identifying information from model for updating statistical
reasons for so finding or (ii) as to which comment submissions. You should parameters (e.g., parameters concerning
the self-regulatory organization submit only information that you wish correlations or volatility) for all risk
consents, the Commission will: to make available publicly. All factors that reflect the most recent data
(A) By order approve or disapprove submissions should refer to File obtained; (3) improve the sensitivity and
the proposed rule change, or Number SR–BOX–2018–18 and should stability of correlation estimates across
(B) institute proceedings to determine be submitted on or before June 21, 2018. risk factors by using de-volatized 4
whether the proposed rule change returns (but using a 500 day look back
For the Commission, by the Division of
should be disapproved. period); and (4) improve OCC’s
Trading and Markets, pursuant to delegated
IV. Solicitation of Comments authority.16 methodology related to the treatment of
defaulting securities 5 that would result
Interested persons are invited to Eduardo A. Aleman,
in stable and realistic risk estimates for
submit written data, views and Assistant Secretary. such securities.6 The Proposed Rule
arguments concerning the foregoing, [FR Doc. 2018–11608 Filed 5–30–18; 8:45 am] Change was published for comment in
including whether the proposed rule BILLING CODE 8011–01–P the Federal Register on December 4,
change is consistent with the Act.
Comments may be submitted by any of 1 15 U.S.C. 78s(b)(1).
the following methods: 2 17 CFR 240.19b–4.
Electronic Comments 3 See Notice infra note 7, at 82 FR 57306.
4 De-volatization is a process of normalizing
• Use the Commission’s internet
amozie on DSK3GDR082PROD with NOTICES1
historical data with the associated volatility thus
comment form (http://www.sec.gov/ facilitating comparison between different sets of
rules/sro.shtml); or data.
• Send an email to rule-comments@ 5 Within the context of OCC’s margin system,
securities that do not have enough historical data
sec.gov. Please include File Number SR– for calibration are classified as ‘‘defaulting
BOX–2018–18 on the subject line. securities.’’ See Notice infra note 15, 82 FR at
61355.
15 See supra note 4. 16 17 CFR 200.30–3(a)(12). 6 See Notice infra note 7, at 82 FR 61354.
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Document Created: 2018-05-31 00:48:27
Document Modified: 2018-05-31 00:48:27
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 83 FR 25079 |
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