83 FR 33969 - Self-Regulatory Organizations; BOX Options Exchange LLC; Order Granting Approval of a Proposed Rule Change To Adopt IM-7130-1 to Rule 7130

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 138 (July 18, 2018)

[Federal Register Volume 83, Number 138 (Wednesday, July 18, 2018)]
[Notices]
[Pages 33969-33970]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-15290]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83624; File No. SR-BOX-2018-18]


Self-Regulatory Organizations; BOX Options Exchange LLC; Order 
Granting Approval of a Proposed Rule Change To Adopt IM-7130-1 to Rule 
7130

July 12, 2018.

I. Introduction

    On May 16, 2018, BOX Options Exchange LLC (the ``Exchange'' or 
``BOX'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to adopt IM-7130-1 to BOX Rule 7130 to provide 
certain BOX Book \3\ information to Participants \4\ upon request. The 
proposed rule change was published for comment in the Federal Register 
on May 31, 2018.\5\ The Commission received no comments on the proposed 
rule change. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The term ``BOX Book'' means the electronic book of orders on 
each single option series maintained by the BOX Trading Host. See 
BOX Rule 100(a)(10).
    \4\ The term ``Participant'' means a firm, or organization that 
is registered with the Exchange pursuant to the BOX Rule 2000 Series 
for purposes of participating in options trading on BOX as an 
``Order Flow Provider'' or ``Market Maker.'' See BOX Rule 
100(a)(41).
    \5\ See Securities Exchange Act Release No. 83318 (May 24, 
2018), 83 FR 25079 (``Notice'').
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II. Description of the Proposed Rule Change

    BOX proposes to adopt new IM-7130-1 to Rule 7130 to provide that, 
upon request, the Exchange may make available to a Participant the 
amount of any priority interest on the BOX Book. For purposes of the 
proposed new rule, the term ``priority interest'' means 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.\6\ The information would be verbally provided to 
Participants for no fee, on a best efforts basis, and would be for 
advisory purposes only.\7\ All BOX Book information would be provided 
on an anonymous basis.\8\
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    \6\ See proposed BOX Rule IM-7130-1. ``Public Customer'' means a 
person that is not a broker or dealer in securities. See BOX Rule 
100(a)(52).
    \7\ See proposed BOX Rule IM-7130-1.
    \8\ See id.
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    Under the proposed rule, Floor Brokers would inquire with an 
Options Exchange Official or his or her designee, and all other 
Participants would inquire with BOX's Market Operations Center.\9\ 
Participants would be required to request this information each time 
and the Exchange would not provide continuous updated information.\10\ 
The Exchange represents that an Options Exchange Official will provide 
the requested information when doing so does not interfere with their 
regulatory responsibilities.\11\
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    \9\ See id. 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 BOX 
Rule 100(a)(32).
    \10\ See proposed BOX Rule IM-7130-1.
    \11\ See Notice, supra note 5, at 25080 n.5.
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    The Exchange believes that the proposed rule change will provide 
Participants greater clarity on the composition and availability of 
liquidity on the BOX Book.\12\ With respect to the BOX Trading Floor, 
the Exchange believes that the availability of this information will 
lead to increased interaction with the BOX Book, because Floor Brokers 
will be aware of the liquidity available on the BOX Book that could 
interact with their Qualified Open Outcry Order (``QOO Order'') \13\ 
and may choose to use such liquidity when executing orders from the 
Trading Floor or using a separate order to sweep that interest.\14\
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    \12\ See Notice, supra note 5, at 25080.
    \13\ 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 BOX Rule 7600(h). See BOX Rule 7600(a)(1). The 
initiating side of a QOO Order will execute against 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. See BOX 
Rule 7600(d)(2).
    \14\ See Notice, supra note 5, at 25080.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national

[[Page 33970]]

securities exchange.\15\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\16\ 
which requires, among other things, that the Exchange's rules be 
designed to prevent fraudulent and manipulative acts and practices, 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.
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    \15\ In approving this proposed rule change the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the proposed rule change, which would 
make priority interest information available upon request for all 
Participants, will provide increased transparency to Participants, 
which the Exchange believes has the potential to result in more 
liquidity on the Exchange and increased interaction with the BOX Book. 
The Commission also notes that the proposed rule change, with respect 
to floor trading, is similar to the procedures of another options 
exchange that operates a trading floor.\17\ For the foregoing reasons, 
the Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act \18\ and the rules and regulations 
thereunder applicable to a national securities exchange.
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    \17\ See NYSE Arca Regulatory Bulletin RB-16-04 (February 19, 
2016) (stating that Floor Brokers on NYSE Arca may inquire with the 
Trading Official at the post to the amount of any priority interest 
on NYSE Arca's electronic book). In addition, the Commission notes 
that some other options exchanges provide similar information on a 
real-time basis to data feed subscribers. See, e.g., Securities 
Exchange Act Release No. 74759 (April 17, 2018), 82 FR 22749 (April 
23, 2015) (SR-MIAX-2015-28) (describing MIAX Order Feed which 
provides the origin of orders on the MIAX order book).
    \18\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\19\ that the proposed rule change (SR-BOX-2018-18) be, and hereby 
is, approved.
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    \19\ 15 U.S.C. 78s(b)(2).
    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15290 Filed 7-17-18; 8:45 am]
 BILLING CODE 8011-01-P