[Federal Register Volume 78, Number 62 (Monday, April 1, 2013)]
[Notices]
[Pages 19562-19564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-07476]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69240; File No. SR-BOX-2013-18]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change to Amend
IM-5050-10 (Mini Options Contracts)
March 26, 2013.
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 March 22, 2013, 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 Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend IM-5050-10 (Mini Options Contracts).
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 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 its rules related to Mini Options
traded on the Exchange. Mini Options overlie 10 equity or ETF shares,
rather than the standard 100 shares.\3\ Mini Options are currently
approved on the following five (5) underlying securities: SPDR S&P 500
ETF (``SPY''), Apple Inc. (``AAPL''), SPDR Gold Trust (``GLD''), Google
Inc. (``GOOG''), and Amazon.com, Inc. (``AMZN''). This is a competitive
filing that is based on a proposal recently filed for immediate
effectiveness by the International Securities Exchange (``ISE'').\4\
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\3\ See Securities Exchange Act Release No. 68771 (January 30,
2013), 78 FR 8208 (February 5, 2013) (SR-BOX-2013-07). The Exchange
began trading Mini Options on March 18, 2013.
\4\ See Securities Exchange Act Release No. 69163 (March 18,
2013), 78 FR 17733 (March 22, 2013) [sic] (Notice of Filing and
Immediate Effectiveness of SR-ISE-2013-23).
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The purpose of this proposed rule change is to amend IM-5050-10
(Mini Options Contracts) to codify the minimum contract threshold
requirement for the execution of Mini Options in the Exchange's
Facilitation Auction and Solicitation Auction. The Facilitation Auction
is a process by which an OFP can attempt to execute a transaction
wherein the OFP seeks to facilitate a block-size order it represents as
agent (``Agency Order''), and/or a transaction wherein the OFP
solicited interest to execute against an Agency Order. OFPs must be
willing to execute the entire size of Agency Orders entered into the
Facilitation Auction through the submission of a contra ``Facilitation
Order''.\5\ Block-size orders are orders for
[[Page 19563]]
fifty (50) or more contracts.\6\ The Solicitation Auction is a process
by which an OFP can attempt to execute orders of 500 or more contracts
it represents as agent (the ``Agency Order'') against contra orders
that it has solicited (``Solicited Order'').\7\ Each Agency Order
entered into the Solicitation Auction shall be all-or-none. The minimum
contract threshold required for the Facilitation Auction and the
Solicitation Auction applies to option contracts that overlie 100
shares and therefore does not currently apply to Mini Options.
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\5\ See BOX Rule 7270(a).
\6\ See IM-7270-2.
\7\ See BOX Rule 7270(b).
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The Exchange now proposes to amend IM-5050-10 (Mini Options
Contracts) to adjust the minimum contract threshold for executing Mini
Options in the Facilitation Auction and Solicitation Auction by ten
times their current requirement. Thus, Mini Options executed in the
Facilitation Auction must be for five hundred (500) or more Mini Option
contracts, and Mini Options executed in the Solicitation Auction must
be for five thousand (5,000) or more Mini Option contracts.
The Exchange believes it is appropriate to adjust the minimum
contract threshold for Mini Options so they are equivalent (same number
of underlying securities) to the minimum contract threshold required
for standard options that are executed in the Facilitation Auction and
Solicitation Auction. The Exchange believes that adjusting the minimum
contract threshold will remove any confusion on the part of market
participants that want to use these Exchange functionalities to execute
Mini Options.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''), in general, and Section 6(b)(5) of the Act, in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, 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 proposed rule change will assure
that standard options and Mini Options on the same underlying security
will have an equivalent minimum contract threshold for the execution of
orders in the Exchange's Facilitation Auction and Solicitation Auction.
The Exchange believes the proposed rule change will also avoid investor
confusion because in the absence of this proposal, the minimum contract
threshold for executing Mini Options in the Facilitation Auction and
Solicitation Auction would have been different than that for standard
options (i.e., different number of underlying securities). The Exchange
does not intend that Mini Options and standard options would have
different minimum contract threshold requirements for its various
auctions executed on the Exchange. The Exchange further believes that
investors and other market participants will benefit from this proposed
rule change because it proposes to clarify and establish the minimum
contract threshold for executing Mini Options in the Facilitation
Auction and Solicitation Auction. The Exchange believes that investors
generally will be expecting the minimum contract threshold for Mini
Options to be equivalent to the minimum contract threshold for standard
options when it comes to executing trades in the Exchange's various
auctions in Mini Options on the same underlying security. This proposed
rule change will therefore lessen investor confusion.
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. In this regard and as indicated
above, the Exchange notes that the rule change is being proposed as a
competitive response to the filing submitted by ISE.\8\ The Exchange
believes this proposed rule change is necessary to permit fair
competition among the options exchanges and to establish uniform rules
regarding the minimum contract threshold requirement for the execution
of Mini Options in the Exchange's Facilitation Auction and Solicitation
Auction. The Exchange believes that the proposed rule change will in
fact relieve any burden on, or otherwise promote competition. Mini
Options are currently approved for trading on multiple options
exchanges and all of the options exchanges that have a minimum contract
threshold in their rules will have the opportunity to amend their rules
to adopt minimum contract thresholds for Mini Options that are
equivalent to the minimum contract threshold for standard options.
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\8\ See supra, note 4.
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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: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and 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. The Commission has waived the five-day prefiling
requirement in this case.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest. The Exchange requests that the Commission waive
the 30-day operative delay so that the proposed rule change may become
immediately operative. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest.\11\ The Exchange began trading Mini Options on March
18, 2013, and waiver of the operative delay will allow the Exchange to
implement its proposal to codify the minimum contract thresholds for
the execution of Mini Options in the Exchange's Facilitation Auction
and Solicitation Auction. For these reasons, the Commission designates
the proposed rule change as operative upon filing.
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\11\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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[[Page 19564]]
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.
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-2013-18 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BOX-2013-18. 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 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 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; 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-2013-18 and should be
submitted on or before April 22, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-07476 Filed 3-29-13; 8:45 am]
BILLING CODE 8011-01-P