[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Notices]
[Pages 62860-62862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24665]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70672; File No. SR-BOX-2013-47]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend BOX Rule 8040
October 11, 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 October 2, 2013, 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.
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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 BOX Rule 8040 (Obligations of Market
Makers) to widen [sic] pre-opening
[[Page 62861]]
phase spread differential requirement imposed on Market Makers. 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 BOX Rule 8040(a)(7) (Obligations of
Market Makers) to widen the pre-opening phase spread differential
requirement imposed on Market Makers.
The Exchange recently eliminated the pre-opening quoting
obligations imposed on BOX Market Makers.\3\ This rule was amended to
put BOX Market Makers on par with market makers on other options
exchanges that do not have pre-market continuous quoting obligations.
In this filing, the Exchange did not adjust the corresponding pre-
opening phase spread differential requirement for Market Makers in Rule
8040 (a)(7). The purpose of this filing is to remove the narrower pre-
opening phase spread differential requirements imposed on Market Makers
in Rule 8040(a)(7). Instead, Market Makers who choose to quote in the
pre-opening phase will be required to quote within the standard bid
ask-differential of $5. The Exchange believes that the narrower pre-
opening phase spread differential requirements are no longer necessary
now that Market Makers are not required to quote during the pre-
opening. Additionally, applying the standard bid-ask differential
requirement to both the pre-opening phase and the continuous trading
phase will eliminate any potential for confusion about Market Maker
obligations. Finally, this change could promote Market Maker quoting
during the pre-opening and, therefore, expedite the opening of all
options series on the Exchange promptly after the opening of the
underlying security.
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\3\ See Securities Exchange Act Release No. 68412 (December 12,
2012), 77 FR 74902 (December 18, 2012) (SR-BOX-2012-022) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Eliminate Market Maker Pre-Opening Obligations on BOX).
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The Exchange further believes that applying the standard bid-ask
differential to all phases of trading is appropriate because it will
more closely align the Exchange's rules with the rules of other option
exchanges that do not have pre-opening quoting requirements,
specifically Nasdaq Stock Exchange Options Market (``NOM'').\4\
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\4\ See Chapter VII, Section 6 of the NOM Rules.
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In addition, the Exchange proposes to remove an exception to the
standard bid-ask differential requirement in Rule 8040(a)(7)(ii). Rule
8040(a)(7)(ii) is no longer necessary as the bids and asks for all
indices are now disseminated to the Exchange by outside service
providers.\5\
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\5\ See IM-6010-1 to BOX Rule 6010.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \6\ in general, and furthers the objectives of Section
6(b)(5) of the Act \7\ 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.
With this proposal, BOX Maker Makers will no longer be required to
comply with narrower spread differential requirements if they choose to
quote in the pre-opening phase. The Exchange believes that removing
this more burdensome obligation could result in more quoting during the
pre-opening phase, thereby increasing liquidity on BOX. The Exchange
also believes it is appropriate to make this amendment to its rules so
that Participants and investors have a clear and accurate understanding
of the Market Maker obligations required under the Exchange's rules. By
removing the rule text, the Exchange is eliminating any potential for
confusion about Market Maker obligations during the pre-opening phase.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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Further, the proposed change conforms BOX's Market Maker
obligations to the requirements of a competing exchange,\8\ which will
promote the application of consistent trading practices across markets
that provide Market Makers with similar benefits.
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\8\ See supra, note 4.
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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, but rather eliminates any
investor confusion and could increase competition by attracting
liquidity. In this regard and as indicated above, the Exchange notes
that the rule change is being proposed as a competitive response to a
recent filing submitted by NOM.\9\
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\9\ Id.
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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 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 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 \10\ and Rule 19b-4(f)(6)
thereunder.\11\ At any time within 60 days of the filing of such
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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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.
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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.
[[Page 62862]]
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-2013-47 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-2013-47. 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-2013-47 and should be
submitted on or before November 12, 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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24665 Filed 10-21-13; 8:45 am]
BILLING CODE 8011-01-P