[Federal Register Volume 81, Number 72 (Thursday, April 14, 2016)]
[Notices]
[Pages 22133-22136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08559]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77572; File No. SR-BOX-2016-14]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule on the BOX Market LLC (``BOX'') Options Facility
April 8, 2016.
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 March 31, 2016, BOX Options Exchange LLC (the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Exchange filed the
proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the Fee Schedule to
revise certain qualification thresholds and fees in Section I.B. of the
BOX Fee Schedule on the BOX Market LLC (``BOX'') options facility.
While changes to the fee schedule pursuant to this proposal will be
effective upon filing, the changes will become operative on April 1,
2016. 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 Exchange 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 Exchange 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 the Fee Schedule for trading on BOX.
Specifically, the Exchange proposes to revise certain qualification
thresholds and fees in Section I.B. of the BOX Fee Schedule, the Tiered
Fee Schedule for Initiating Participants and BOX Volume Rebate
(``BVR'').
Under the Tiered Fee Schedule for Initiating Participants, the
Exchange assesses a per contract execution fee to all Primary
Improvement Order executions initiated by the particular Initiating
Participant. Percentage thresholds are calculated on a monthly basis by
totaling the Initiating Participant's Primary Improvement Order volume
submitted to BOX, relative to the total national Customer volume in
multiply-listed options classes. The current tiered fee schedule for
Initiating Participants is as follows:
------------------------------------------------------------------------
Percentage thresholds
of national customer Per contract
Tier volume in multiply- fee (all
listed options classes account types)
(monthly)
------------------------------------------------------------------------
1.............................. 0.000%-0.079%.......... $0.25
[[Page 22134]]
2.............................. 0.080%-0.159%.......... 0.20
3.............................. 0.160%-0.339%.......... 0.12
4.............................. 0.340%-0.849%.......... 0.07
5.............................. 0.850% and Above....... 0.03
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The Exchange proposes to adjust the percentage thresholds in Tiers
3 through 5. Additionally, the Exchange proposes to raise the fee
associated with Tier 5 from $0.03 to $0.05. The new Tiered Fee Schedule
for Initiating Participants set forth in Section I.B.1. of the BOX Fee
Schedule will be as follows:
------------------------------------------------------------------------
Percentage thresholds
of national customer Per contract
Tier volume in multiply- fee (all
listed options classes account types)
(monthly)
------------------------------------------------------------------------
1.............................. 0.000%-0.079%.......... $0.25
2.............................. 0.080%-0.159%.......... 0.20
3.............................. 0.160%-0.499%.......... 0.12
4.............................. 0.500%-0.999%.......... 0.07
5.............................. 1.000% and Above....... 0.05
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Next, the Exchange proposes to revise certain qualification
thresholds in the BVR. Under the current BVR, the Exchange offers a
tiered per contract rebate for all PIP Orders and COPIP orders of 100
contracts and under. Percentage thresholds are calculated on a monthly
basis by totaling the Participant's PIP and COPIP volume submitted to
BOX, relative to the total national Customer volume in multiply-listed
options classes.
The current per contract rebate for Participants in PIP and COPIP
Transactions under the BVR is:
----------------------------------------------------------------------------------------------------------------
Per contract rebate (all
Percentage thresholds of national account types)
Tier customer volume in multiply-listed -------------------------------
options classes (monthly) PIP COPIP
----------------------------------------------------------------------------------------------------------------
1.......................................... 0.000% to 0.159%................... ($0.00) ($0.00)
2.......................................... 0.160% to 0.339%................... ($0.04) ($0.02)
3.......................................... 0.340% to 0.849%................... ($0.11) ($0.04)
4.......................................... 0.850% and Above................... ($0.14) ($0.06)
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The Exchange proposes to adjust the BVR percentage threshold for
Tier 3 to ``0.340% to 0.99%'' and Tier 4 to ``1.00% and Above.'' The
quantity submitted will continue to be calculated on a monthly basis by
totaling the Participant's PIP and COPIP volume submitted to BOX,
relative to the total national Customer volume in multiply-listed
options classes.
The new BVR set forth in Section I.B.2 of the BOX Fee Schedule will
be as follows:
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Per contract rebate (all
Percentage thresholds of national account types)
Tier customer volume in multiply-listed -------------------------------
options classes (monthly) PIP COPIP
----------------------------------------------------------------------------------------------------------------
1.......................................... 0.000% to 0.159%................... ($0.00) ($0.00)
2.......................................... 0.160% to 0.339%................... ($0.04) ($0.02)
3.......................................... 0.340% to 0.99%.................... ($0.11) ($0.04)
4.......................................... 1.00% and Above.................... ($0.14) ($0.06)
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Lastly, the Exchange is proposing to remove reference and
information relating to Mini Options, as the Exchange no longer lists
or trades Mini Options and has no current plans to do so.
The Exchange added rules relating to the listing of Mini Options
(options overlying 10 shares of stock) in 2013 \5\ and later changed
its Fee Schedule to address the treatment of Mini Options, including
establishing transactions fees for these products.\6\ However, the
Exchange no longer lists or trades Mini Option series, and has no
current plans to do so and proposes to strip references, and charges
related to, Mini Options from the Fee Schedule.
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\5\ See Securities Exchange Act Release No. 68771 (January 30,
2013), 78 FR 8208 (February 5, 2013) (Notice of Filing and Immediate
Effectiveness SR-BOX-2013-07).
\6\ See Securities Exchange Act Release No. 69202 (March 21,
2013), 78 FR 18642 (March 27, 2013) (Notice of Filing and Immediate
Effectiveness SR-BOX-2013-15).
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[[Page 22135]]
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act, in general, and Section
6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among BOX Participants and other persons using its facilities
and does not unfairly discriminate between customers, issuers, brokers
or dealers.
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\7\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes the proposed amendments to the Tiered Fee
Schedule for Initiating Participants in Section I.B.1. of the BOX Fee
Schedule are reasonable, equitable and non-discriminatory. The reduced
fees related to trading activity in BOX Auction Transactions are
available to all BOX Options Participants that initiate Auction
Transactions, and they may choose whether or not to trade on BOX to
take advantage of the discounted fees for doing so. The Exchange also
believes adjusting certain percentage thresholds within the tiers and a
fee associated with a tier is reasonable and appropriate, as this
Tiered Fee Schedule is in place to provide incentives to BOX
Participants to submit their customer order into the PIP for potential
price improvement. Further, the Exchange believes the proposed
thresholds and fees remain competitive when compared to the auction
transaction fees on other exchanges.\8\
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\8\ Comparative fees at other exchanges range from $0.05 to
$0.30. See Section IV of the Phlx Pricing Schedule entitled ``PIXL
Pricing''; International Securities Exchange (``ISE'') Schedule of
Fees, Section I. Regular Order Fees and Rebates ``Select Symbols.''
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The Exchange also believes the proposed amendments to the BVR in
Section I.B of the BOX Fee Schedule are reasonable, equitable and non-
discriminatory. The BVR was adopted to attract Public Customer order
flow to the Exchange by offering these Participants incentives to
submit their PIP and COPIP Orders to the Exchange and the Exchange
believes it is appropriate to now amend the BVR. The Exchange believes
it is equitable and not unfairly discriminatory to amend the BVR, as
all Participants have the ability to qualify for a rebate, and rebates
are provided equally to qualifying Participants. Finally, the Exchange
believes it is reasonable and appropriate to continue to provide
incentives for Public Customers, which will result in greater liquidity
and ultimately benefit all Participants trading on the Exchange.
BOX believes it is reasonable, equitable and not unfairly
discriminatory to adjust the monthly Percentage Thresholds of National
Customer Volume in Multiply-Listed Options Classes. The volume
thresholds and applicable rebates are meant to incentivize Participants
to direct order flow to the Exchange to obtain the benefit of the
rebate, which will in turn benefit all market participants by
increasing liquidity on the Exchange. Other exchanges employ similar
incentive programs; \9\ and the Exchange believes that the proposed
changes to the volume thresholds and rebates are reasonable and
competitive when compared to incentive structures at other exchanges.
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\9\ See Section B of the PHLX Pricing Schedule entitled
``Customer Rebate Program;'' ISE Gemini's Qualifying Tier Thresholds
(page 6 of the ISE Gemini Fee Schedule); and CBOE's Volume Incentive
Program (VIP).
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Lastly, the Exchange believes the proposed change to remove
references and information relating to Mini Options from the Fee
Schedule is reasonable, equitable, and not unfairly discriminatory, as
the Exchange no longer lists or trades Mini-option series and has no
intention to do so at this time. Thus, removing outmoded references on
the Fee Schedule would alleviate potential investor confusion and
improve the clarity and transparency of the Fee Schedule. The proposed
change is also reasonable, equitable, and not unfairly discriminatory
as it applies to all market participants.
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 Exchange is simply
proposing to revise certain qualification thresholds and fees in the
Section I.B. of the BOX Fee Schedule. The Exchange believes that the
volume based rebates and fees increase intermarket and intramarket
competition by incenting Participants to direct their order flow to the
exchange, which benefits all participants by providing more trading
opportunities and improves competition on the Exchange. The Exchange
also believes the removal of references to Mini Options will not impose
any burden on competition but will 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
No written comments were either solicited or received.
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)(ii) of the Exchange Act \10\ and Rule 19b-4(f)(2)
thereunder,\11\ because it establishes or changes a due, or fee.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further 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-2016-14 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-2016-14. 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
[[Page 22136]]
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-2016-14, and should be
submitted on or before May 5, 2016.
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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08559 Filed 4-13-16; 8:45 am]
BILLING CODE 8011-01-P