[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75211-75213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29621]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73831; File No. SR-BOX-2014-27]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Interpretive Material to Rule 7150 (Price Improvement Period
``PIP'') and Interpretive Material to Rule 7245 (Complex Order Price
Improvement Period ``COPIP'') To Extend the Pilot Period That Permit
the Exchange To Have No Minimum Size Requirement for Orders Entered
Into the PIP and COPIP Until July 18, 2015
December 12, 2014.
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 December 5, 2014, BOX Options Exchange LLC (``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 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 Interpretive Material to Rule 7150
(Price Improvement Period ``PIP'') and Interpretive Material to Rule
7245 (Complex Order Price Improvement Period ``COPIP'') to extend the
pilot programs that permit the Exchange to have no minimum size
requirement for orders entered into the PIP (``PIP Pilot Program'') and
COPIP (``COPIP 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
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
[[Page 75212]]
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 purpose of the proposed rule change is to extend the PIP and
COPIP Pilot Programs for an additional seven months or until the date
on which the pilot programs are approved on a permanent basis,
whichever is earlier. The PIP and COPIP Pilot Programs allow the
Exchange to have no minimum size requirement for orders entered into
the PIP \3\ and the COPIP.\4\ The Exchange has committed to provide
certain data to the Commission during the PIP and COPIP Pilot
Programs.\5\ The proposed rule change retains the text of IM-7150-1 to
Rule 7150 and IM-7245-1 to Rule 7245; and seeks to extend the operation
of the PIP and COPIP Pilot Programs until July 18, 2015.
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\3\ The PIP Pilot Program is currently set to expire on December
18, 2014. See Securities Exchange Act Release Nos. 66871 (April 27,
2012) 77 FR 26323 (May 3, 2012) (File No.10-206, In the Matter of
the Application of BOX Options Exchange LLC for Registration as a
National Securities Exchange Findings, Opinion, and Order of the
Commission), 67255 (June 26, 2012) 77 FR 39315 (July 2, 2013) (SR-
BOX-2012-009) (Notice of Filing and Immediate Effectiveness of a
Proposal To Extend a Pilot Program That Permits BOX to Have No
Minimum Size Requirement for Orders Entered Into the Price
Improvement Period), 69846 (June 25, 2013) 78 FR 39365 (July 1,
2013) (SR-BOX-2013-33) (Notice of Filing and Immediate Effectiveness
of a Proposal To Extend a Pilot Program That Permits BOX to Have No
Minimum Size Requirement for Orders Entered Into the Price
Improvement Period), 72545 (July 7, 2014) 79 FR 40182 (July 11,
2014) (SR-BOX-2014-19) (Notice of Filing and Immediate Effectiveness
of a Proposed Rule Change to amend Interpretive Material to Rule
7150 (Price Improvement Period ``PIP'') and Interpretive Material to
Rule 7245 (Complex Order Price Improvement Period ``COPIP''), and
73314 (October 7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-
23) (Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Extend the Pilot Programs That Permit the Exchange To Have
No Minimum Size Requirement for Orders Entered Into the PIP (``PIP
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December
18, 2014).
\4\ The COPIP Pilot Program is currently set to expire on
December 18, 2014. See Securities Exchange Act Release Nos. 71148
(December 19, 2013) 78 FR 78437 (December 26, 2013) (Notice of
Filing of Amendment Nos. 1 and 2 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1
and 2, to Permit Complex Orders to Participate in Price Improvement
Periods), 72545 (July 7, 2014) 79 FR 40182 (July 11, 2014) (SR-BOX-
2014-19) (Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change to amend Interpretive Material to Rule 7150 (Price
Improvement Period ``PIP'') and Interpretive Material to Rule 7245
(Complex Order Price Improvement Period ``COPIP''), and 73314
(October 7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-23)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Extend the Pilot Programs That Permit the Exchange To Have
No Minimum Size Requirement for Orders Entered Into the PIP (``PIP
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December
18, 2014).
\5\ See supra note 3 at 26334 and note 4 at 78441.
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The Exchange notes that the PIP and COPIP Pilot Programs permit
Participants to trade with their customer orders that are less than 50
contracts. In particular, any order entered into the PIP is guaranteed
an execution at the end of the auction at a price at least equal to the
national best bid or offer. Any order entered into the COPIP is
guaranteed an execution at the end of the auction at a price at least
equal to or better than the cNBBO,\6\ cBBO \7\ and BBO on the Complex
Order Book for the Strategy at the time of commencement. In further
support of this proposed rule change, the Exchange will submit to the
Commission monthly a PIP Pilot Program Report and a COPIP Pilot Program
Report, offering detailed data from, and analysis of, the PIP Pilot
Program and COPIP Pilot Program.
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\6\ As defined in BOX Rule 7240(a)(3), the term ``cNBBO'' means
the best net bid and offer price for a Complex Order Strategy based
on the NBBO for the individual options components of such Strategy.
\7\ As defined in BOX Rule 7240(a)(1), the term ``cBBO'' means
the best net bid and offer price for a Complex Order Strategy based
on the BBO on the BOX Book for the individual options components of
such Strategy.
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The Exchange believes that, by extending the expiration of the PIP
and COPIP Pilot Programs, the proposed rule change will allow for
further analysis of the PIP and COPIP Pilot Programs and a
determination of how the PIP and COPIP Pilot Programs shall be
structured in the future.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\8\ in general, and Section
6(b)(5) of the Act,\9\ in particular, in that it is designed to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism for a free and open market and a national market
system and, in general, to protect investors and the public interest.
The Exchange believes that the data demonstrates that there is
sufficient investor interest and demand to extend the PIP and COPIP
Pilot Programs for an additional seven months or until the date on
which the pilot programs are approved on a permanent basis, whichever
is earlier. The Exchange represents that the PIP and COPIP Pilot
Programs are designed to create tighter markets and ensure that each
order receives the best possible price.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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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. Specifically, the Exchange
believes that, by extending the expiration of the PIP and COPIP Pilot
Programs, the proposed rule change will allow for further analysis of
the PIP and COPIP Pilot Programs and a determination of how the PIP and
COPIP Pilot Programs shall be structured in the future. In doing so,
the proposed rule change will also serve to promote regulatory clarity
and consistency, thereby reducing burdens on the marketplace and
facilitating investor protection.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder
because the proposal does not: (i) Significantly affect the protection
of investors or the public interest; (ii) impose any significant burden
on competition; and (iii) by its terms, 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.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to
give the Commission written notice of the Exchange's 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 Exchange has satisfied this
requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-
[[Page 75213]]
4(f)(6)(iii) \13\ permits the Commission to designate a shorter time if
such action is consistent with the protection of investors and the
public interest. The Exchange has requested that the Commission waive
the 30-day operative delay period so the pilot programs can continue
without interruption. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest, as it will allow the pilot programs to continue
uninterrupted, thereby avoiding any potential investor confusion that
could result from a temporary interruption in the pilot programs. For
these reasons, the Commission designates the proposed rule change to be
operative on December 18, 2014.\14\
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\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.\15\
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\15\ 15 U.S.C. 78s(b)(3)(C).
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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. 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-2014-27 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-2014-27. 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 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; 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-2014-27 and should be
submitted on or before January 7, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29621 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P