83 FR 577 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5050 To Extend the Pilot Program That Lists RealDay Options (“RealDay Pilot Program”)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 3 (January 4, 2018)

[Federal Register Volume 83, Number 3 (Thursday, January 4, 2018)]
[Notices]
[Pages 577-579]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-28436]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82414; File No. SR-BOX-2017-38]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Rule 5050 To Extend the Pilot Program That Lists RealDay Options 
(``RealDay Pilot Program'')

December 28, 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 December 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 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.

---------------------------------------------------------------------------

[[Page 578]]

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 5050 to extend the pilot 
program that lists RealDay Options (``RealDay Pilot Program''). 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 amend Rule 5050(f) to extend the time 
period of the RealDay Pilot Program,\3\ which is currently scheduled to 
expire on February 2, 2018, through February 2, 2019.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 79936 (February 2, 
2017), 82 FR 9886 (February 8, 2017) (Order Granting Approval of a 
Proposed Rule Change To Amend Rule 5050 Series of Options Contracts 
Open for Trading To Provide for the Listing and Trading on the 
Exchange of RealDay).
---------------------------------------------------------------------------

    This filing does not propose any substantive changes to the RealDay 
Pilot Program. In the original proposal to establish the RealDay Pilot 
Program, the Exchange stated that if it were to propose an extension, 
permanent approval or termination of the program, the Exchange would 
submit, along with any filing proposing such amendments to the program, 
a report containing an analysis of volume, open interest, and trading 
patterns in RealDay Options. In addition, the Exchange stated that 
pilot report would provide analysis of price volatility and trading 
activity in additional option series.
    Because the industry has not finished developing the technology for 
clearing and settlement of RealDay Options and BOX has not launched 
this product, there is no meaningful data available to compile the 
Pilot Report at this time and therefore the Exchange did not file a 
Pilot Report prior to this extension request. The Exchange believes it 
is appropriate to extend the RealDay Pilot Program to provide time for 
the industry to develop and implement the requisite technology so that 
the Exchange can prepare a meaningful Pilot Report if it were to 
propose any further extension, permanent approval or termination of the 
program.
    As with the original proposal to establish the RealDay Pilot 
Program, the Exchange represents that the Pilot Report will be 
submitted within two (2) months of the end of the extended pilot 
period. The Pilot Report will contain the following volume and open 
interest data for RealDay Options:
    (1) Daily contract trading volume aggregated for all trades, for 
all option series with less than 31 days until expiration;
    (2) daily contract trading volume aggregated by expiration date, 
for all option series with less than 31 days until expiration;
    (3) daily contract trading volume for each individual series;
    (4) daily open interest aggregated for all series, for all option 
series with less than 31 days until expiration;
    (5) daily open interest aggregated for all series by expiration 
date, for all option series with less than 31 days until expiration;
    (6) daily open interest for each individual series;
    (7) statistics on the distribution of trade sizes;
    (8) type of market participant trading (e.g., contract trading 
volume for each market participant type); and
    (9) 5-minute returns, level changes, and trading volume for the S&P 
500 Index, VIX, SPY, IVV, and expiring RealDay options between open and 
close for the first and second Wednesday of the month that is a trading 
day and trading days when standard SPY options expire.
    In addition to the pilot report, the Exchange would periodically 
provide the Commission with interim reports of the information listed 
in items (1) through (9) above as required by the Commission while the 
pilot is in effect. These interim reports would also be provided on a 
confidential basis.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\4\ in general, and Section 
6(b)(5) of the Act,\5\ in particular, in that it is 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. The Exchange 
believes that extending the RealDay Pilot Program promotes just and 
equitable principles of trade by permitting market participants, 
including market makers, institutional investors and retail investors, 
to introduce new and innovative products to the marketplace. Further, 
the Exchange believes that extending the RealDay Pilot Program will 
allow the industry to fully develop and implement the requisite 
technology for RealDay Options which will allow the Exchange to launch 
the Program in order to gather the requisite data for the above 
mentioned pilot report.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 proposed rule change is not 
designed to address any aspect of competition, whether between the 
Exchange and its competitors, or among market participants. Instead, 
the proposed rule change is designed to allow the RealDay Pilot Program 
to continue while the industry develops the technology needed for 
RealDay Options.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.

---------------------------------------------------------------------------

[[Page 579]]

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of 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-2017-38 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2017-38. 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 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. 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-2017-38, and should be submitted on 
or before January 25, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-28436 Filed 1-3-18; 8:45 am]
BILLING CODE 8011-01-P