[Federal Register Volume 83, Number 105 (Thursday, May 31, 2018)]
[Notices]
[Pages 25074-25076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11607]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83317; File No. SR-BOX-2018-17]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing of Proposed Rule Change To Amend Rules 7150 and 7245
May 24, 2018.
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 May 14, 2018, 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 the
Substance of the Proposed Rule Change
The Exchange proposes to amend Rules 7150 and 7245. 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 Rules 7150 (Price Improvement Period
(``PIP'')) and 7245 (Complex Price Improvement Period (``COPIP'')) to
provide additional information in the respective auction notifications.
Specifically, the Exchange is proposing to provide the account type of
the PIP Order \3\ and COPIP Order \4\ as part of the auction
broadcast.\5\
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\3\ A PIP Order is an order that is executed entirely via the
Price Improvement Period (``PIP''). See Rule 7150(f).
\4\ A COPIP Orders is a Complex Order that is executed via the
Complex Order Price Improvement Period (``COPIP''). See Rule
7245(f).
\5\ BOX has the following account types: Public Customer,
Professional Customer, Broker Dealer, Market Maker and Away Market
Maker. See RC-2014-05A for more details.
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The system commences a PIP and COPIP Auction by broadcasting a
message via the High Speed Vendor Feed (``HSVF'').\6\ Currently, the
broadcast: (1) States that a Primary Improvement Order \7\ has been
processed; (2) contains information concerning series,\8\ size, start
price, and side of market; and (3) states when the auction will
conclude. The Exchange is now proposing that, in addition to the above
information, the broadcast will include the account type of the PIP and
COPIP Order.\9\ The Exchange notes that other option exchanges provide
account type information for orders on their electronic book as part of
their data feeds.\10\
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\6\ See Rules 7150(f) and 7245(f).
\7\ A Primary Improvement Order is a contra side order equal to
the full size of the PIP or COPIP Order. See Rules 7150(f) and
7245(f).
\8\ For a COPIP, the strategy identifier is broadcasted.
\9\ See proposed changes to Rules 7150(f) and 7245(f).
\10\ See Securities Exchange Act Release No. 74759 (April 17,
2015), 80 FR 22749 (Notice of Filing and Immediate Effectiveness SR-
MIAX-2015-28). The MIAX Order Feed provides, among other things, the
origin of each order for the entire order book to its users. The
Exchange notes there are certain differences between the proposal
and the MIAX Order Feed. Specifically, the Exchange is only
proposing to provide the account type for PIP and COPIP Orders while
MIAX provides the account type of each order for the entire order
book, but not for auctions. The Exchange believes this is a minor
difference because both exchanges are providing the same information
(i.e., account type) with BOX providing it to a limited subset of
orders where MIAX is not providing such information. Further, as
expressed in the proposal, the Exchange does not believe that the
proposed information will have a material impact on the
participation during the PIP and COPIP auctions. Therefore, the
Exchange believes it is reasonable and consistent with the Act to
provide the proposed information for PIP and COPIP Orders. See also
Securities Exchange Act Release No. 66993 (May 15, 2012), 77 FR
30043 (Notice of Filing and Immediate Effectiveness SR-PHLX-2012-
63).
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[[Page 25075]]
The HSVF provides data to enhance the ability of subscribers to
analyze market conditions and to create and test trading models and
analytical strategies. In response to Participant feedback, the
Exchange is exploring the feasibility of adding information (i.e.
account type) that market participants can use to gain comprehensive
insight into the trading activity on the Exchange as well as additional
transparency with regard to orders submitted to the Exchange. The
Exchange is proposing to first include the account type of the PIP and
COPIP Order into the PIP Broadcast because such a change can be
implemented quickly.\11\ The Exchange believes that providing the
proposed information is important as it will provide additional
transparency to market participants so they may have greater insight
into the order flow on the Exchange.
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\11\ The Exchange notes that including the account type of all
orders on the BOX Book would take substantially longer to implement.
The Exchange believes that providing the account type for PIP and
COPIP Orders can be implemented in a short time frame and will allow
the Exchange to assess whether such information would be beneficial
in BOX's HSVF.
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The Exchange does not believe the proposed change will have a
material impact on competition. Specifically, the Exchange does not
believe that the proposed change will have a noticeable impact on
competition or the level of responses during an auction. The Exchange
believes that Participants will ultimately make a determination on
whether to respond to the auction based on price, size, current quote
and market conditions. The proposed information will provide additional
transparency to Participants; however, it should not materially affect
participation during the auctions. As such, the Exchange believes the
proposed change is not unfairly discriminatory.\12\
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\12\ The Exchange notes that PIP and COPIP Orders are entered
into the system with a contra-side order guaranteeing the full size
of the PIP or COPIP Order. Therefore, the PIP and COPIP Order is
fully guaranteed and will always receive a full execution once
submitted to the system.
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The Exchange anticipates implementing the proposed change during
the third quarter of 2018, pending approval of this filing. The
Exchange will provide at least two weeks notification to Participants
of the exact implementation date via Circular.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \13\ in general, and furthers the objectives of Section
6(b)(5) of the Act \14\ 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.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes the proposed rule change is
designed to remove impediments to and perfect the mechanisms of a free
and open market and a national market system by providing additional
information and insight to Participants. Further, the Exchange believes
that the proposed change will enhance Participants' ability to make
more informed and timely trading decisions. Additionally, as set forth
above, the Exchange believes that the proposed change is reasonable and
appropriate as another options exchange disseminates account type
information on orders.\15\
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\15\ See supra note 10.
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The Exchange believes the proposed change is not unfairly
discriminatory because the proposed information will be available to
all subscribers of the HSVF. As such, the Exchange does not believe the
proposed change will have an adverse impact on any market participant.
Additionally, as explained above, the Exchange does not believe the
proposed change will have a material impact on competition during the
auctions.
B. Self-Regulatory Organization's Statement on Burden on Competition
This proposed change will give market participants greater
information on which to base their trading strategies. As such, 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. As discussed above, other option exchanges
include account type information in their data feeds. Additionally, the
Exchange does not believe that the proposed change will have a material
impact on competition during the auction.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be 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-2018-17 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-2018-17. 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
[[Page 25076]]
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-
2018-17, and should be submitted on or before June 21, 2018.
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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11607 Filed 5-30-18; 8:45 am]
BILLING CODE 8011-01-P