Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Notices 65381 

12 17 CFR 200.30–3(a)(12). 

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). 

5See Miami International Securities Exchange 

LLC (‘‘MIAX’’) Fee Schedule. MIAX charges its 

Members and non-Members a monthly fee of $1,100 

for each 1 Gigabit connection and $5,500 for each 

10 Gigabit connection to MIAX’s Primary/ 

Secondary Facility. The Exchange notes a minor 

difference between MIAX’s connectivity fees and 

BOX’s proposal. MIAX prorates their connectivity 

fees when a Member makes a change to their 

connectivity (by adding or deleting connections). 

BOX notes that, like the Exchange’s Port Fees and 

Continued 

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–NYSE–2018–54. 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 

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–NYSE–2018–54, and 

should be submitted on or before 

January 10, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27510 Filed 12–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84823; File No. SR–BOX– 

2018–37] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing of a 

Proposed Rule Change To Amend the 

Fee Schedule on the BOX Market LLC 

(‘‘BOX’’) Options Facility To Establish 

BOX Connectivity Fees for Participants 

and Non-Participants Who Connect to 

the BOX Network; Suspension of and 

Order Instituting Proceedings To 

Determine Whether To Approve or 

Disapprove the Proposed Rule Change 

December 14, 2018. 

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 November 

30, 2018, BOX Exchange LLC 

(‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Item II below, which 

Item has 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 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons and is, 

pursuant to Section 19(b)(3)(C) of the 

Act, hereby: (i) Temporarily suspending 

the proposed rule change; and (ii) 

instituting proceedings to determine 

whether to approve or disapprove the 

proposed rule change. 

I. Self-Regulatory Organization’s 

Statement of the Terms of 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 on the BOX 

Market LLC (‘‘BOX’’) options facility. 

The fees became operative on December 

1, 2018. 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://boxexchange.com. 

II. Self-Regulatory Organization’s 

Description of 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 

Section VI. (Technology Fees) of the 

BOX Fee Schedule to establish BOX 

Connectivity Fees for Participants and 

non-Participants who connect to the 

BOX network. Connectivity fees will be 

based upon the amount of bandwidth 

that will be used by the Participant or 

non-Participant. Further, BOX 

Participants or non-Participants 

connected as of the last trading day of 

each calendar month will be charged the 

applicable Connectivity Fee for that 

month. The Connectivity Fees will be as 

follows: 

Connection type Monthly fees 

Non-10 Gb Connection.$1,000 per connection 

10 Gb Connection ..... $5,000 per connection 

The Exchange also proposes to amend 

certain language and numbering in 

Section VI.A to reflect the changes 

discussed above. Specifically, BOX 

proposes to add the title ‘‘Third Party 

Connectivity Fees’’ under Section VI.A. 

Further, the Exchange proposes to add 

Section VI.A.2, which details the 

proposed BOX Connectivity Fees 

discussed above. 

Participants and non-Participants 

with ten (10) Gigabit (‘‘Gb’’) connections 

will be charged a monthly fee of $5,000 

per connection. Participants and nonParticipants with non-10 Gb 

connections will be charged a monthly 

fee of $1,000 per connection. The 

Exchange notes that another exchange 

in the industry has similar connectivity 

fees 5 and that several other exchanges 


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65382 Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Notices 

HSVF Fees, Participants or non-Participants 

connected as of the last trading day of each calendar 

month will be charged the applicable Connectivity 

Fee for that month. 

6See infra note 12. 

7The Exchange notes that with the proposed 

change discussed herein, Participants and nonParticipants credentialed to use the HSVF Port who 

also have physical connections to the BOX system 

will be charged for both the HSVF monthly fee and 

the applicable amount for their physical 

connections to BOX. For example, if nonParticipant X is credentialed to use the HSVF Port 

and has three (3) physical non-10Gb connections to 

BOX, non-Participant X will be charged $1500 for 

the monthly HSVF Port Fee and $3000 for the three 

non-10Gb physical connections to BOX. 

8See Cboe Data Services, LLC. (‘‘Cboe CDS’’) Fee 

Schedule. Cboe CDS charges its Customers that 

receive data through a direct connection to CDS or 

through a connection to CDS provided by an 

extranet provider $500 per port per month. Cboe 

CDS’s port fee applies to receipt of any Cboe 

Options data feed but is only assessed once per data 

port. In addition to the data port fee, Cboe Exchange 

Inc. (‘‘Cboe’’) charges connectivity fees based on the 

bandwidth used to connect to the Exchange to 

receive such data. See Cboe Fee Schedule. 

9See Securities Exchange Act Release No. 83728 

(July 27, 2018), 83 FR 37853 (August 2, 2018) (SR– 

BOX–2018–24). 

10See Letter from Tyler Gellasch, Executive 

Director, The Healthy Markets Association, to Brent 

J. Fields, Secretary, Commission, dated August 23, 

2018 (‘‘Healthy Markets Letter’’). 

11See Securities Exchange Act Release No. 34– 

84168 (September 17, 2018). 

12See Letter from Theodore R. Lazo, Managing 

Director and Associate General Counsel, and Ellen 

Greene, Managing Director, Financial Services 

Operations, Securities Industry and Financial 

Markets Association, dated October 15, 2018. 

13See Letter from Amir Tayrani, Partner, Gibson, 

Dunn & Crutcher LLP, dated September 19, 2018. 

14See Petition for Review of Order Temporarily 

Suspending BOX Exchange LLC’s Proposal to 

Amend the Fee Schedule on BOX Market LLC, 

dated September 26, 2018. 

15See Securities Exchange Act Release No. 84614. 

Order Granting Petition for Review and Scheduling 

Filing of Statements, dated November 16, 2018. 

Separately, the Securities Industry and Financial 

Markets Association filed an application under 

Section 19(d) of the Exchange Act challenging the 

Exchange’s proposed fees as alleged prohibitions or 

limitations on access. See In re Securities Industry 

and Financial Markets Association, Admin. Proc. 

File No. 3–18680 (Aug. 24, 2018). The Commission 

thereafter remanded that denial-of-access 

proceeding to the Exchange while ‘‘express[ing] no 

view regarding the merits’’ and emphasizing that it 

was ‘‘not set[ting] aside the challenged rule change[ 

].’’ In re Applications of SIFMA & Bloomberg, 

Exchange Act Rel. No. 84433, at 2 (Oct. 16, 2018) 

(‘‘Remand Order’’), available at https://

www.sec.gov/litigation/opinions/2018/34- 

84433.pdf. The Division’s Suspension Order is 

inconsistent with the Commission’s intent in the 

Remand Order to leave the challenged fees in place 

during the pendency of the remand proceedings 

and singles out the Exchange for disparate 

treatment because it means that the Exchange— 

unlike every other exchange whose rule changes 

were the subject of the Remand Order—is not 

permitted to continue charging the challenged fees 

during the remand proceedings. 

16 In addition to the MIAX connectivity fees cited 

above, Nasdaq PHLX LLC (‘‘Phlx’’), The Nasdaq 

Stock Market LLC (‘‘Nasdaq’’), NYSE Arca, Inc. 

(‘‘Arca’’), NYSE American LLC (‘‘NYSE American’’), 

Nasdaq ISE, LLC (‘‘ISE’’), Cboe Exchange, Inc. 

(‘‘Cboe’’), Cboe BZX Exchange, Inc. (‘‘CboeBZX’’), 

Cboe EDGX Exchange, Inc. (‘‘CboeEDGX’’) and Cboe 

C2 Exchange, Inc. (‘‘C2’’) all offer a type of 10Gb 

and non-10Gb connectivity alternative to their 

participants. See Phlx, and ISE Rules, General 

Equity and Options Rules, General 8, Section 1(b). 

Phlx and ISE each charge a monthly fee of $2,500 

for each 1Gb connection, $10,000 for each 10Gb 

connection and $15,000 for each 10Gb Ultra 

connection, which is the equivalent of the 

Exchange’s 10Gb ULL connection. See also Nasdaq 

Price List—Trading Connectivity. Nasdaq charges a 

monthly fee of $7,500 for each 10Gb direct 

connection to Nasdaq and $2,500 for each direct 

connection that supports up to 1Gb. See also NYSE 

American Fee Schedule, Section V.B, and Arca Fees 

and Charges, Co-Location Fees. NYSE American 

and Arca each charge a monthly fee of $5,000 for 

each 1Gb circuit, $14,000 for each 10Gb circuit and 

$22,000 for each 10Gb LX circuit, which is the 

equivalent of the Exchange’s 10Gb ULL connection. 

See also Cboe, CboeBZX, CboeEDGX and C2 Fee 

Schedules. Cboe charges monthly quoting and order 

entry bandwidth packet fees. Specifically, Cboe 

charges $1,600 for the 1st through 5th packet, $800 

for the 6th through 8th packet, $400 for the 9th 

through 13th packet and $200 for the 14th packet 

and each additional packet. CboeBZX, CboeEDGX 

and C2 each charge a monthly fee of $2,500 for each 

1Gb connection and $7,500 for each 10Gb 

connection. 

charge higher connectivity fees.6 The 

Exchange also notes that certain fees 

will continue to be assessed by the 

datacenters and will be billed directly to 

the market participant. 

Next, the Exchange is amending 

Section VI.C. High Speed Vendor Feed 

(‘‘HSVF’’) of the Fee Schedule. 

Specifically, BOX is proposing to delete 

Section VI.C. and reclassify the HSVF 

Connection as a Port Fee. The Exchange 

believes this reclassification is more 

accurate, as HSVF subscription is not 

dependent on a physical connection to 

the Exchange. Instead, subscribers must 

be credentialed by BOX to receive the 

HSVF. The HSVF Fee will remain 

unchanged; BOX will assess a HSVF 

Port Fee of $1,500 per month 7 for each 

month a Participant or non-Participant 

is credentialed to use the HSVF Port. 

The Exchange notes that another 

exchange has a similar classification 

and charges similar fees.8

The Exchange initially filed the 

proposed fees on July 19, 2018, 

designating the proposed fees effective 

July 1, 2018 [sic]. The proposed rule 

change was published for comment in 

the Federal Register on August 2, 2018.9

The Commission received one comment 

letter on the proposal.10 The proposed 

fees remained in effect until they were 

temporarily suspended pursuant to a 

suspension order (the ‘‘Suspension 

Order’’) issued by the Division of 

Trading and Markets, which also 

instituted proceedings to determine 

whether to approve or disapprove the 

proposed rule change.11 The 

Commission subsequently received one 

further comment letter on the proposed 

rule change, supporting the decision to 

suspend and institute proceedings on 

the proposed fee change.12

In response to the Suspension Order, 

the Exchange timely filed a Notice of 

Intention to Petition for Review 13 and 

Petition for Review to vacate the 

Division’s Order,14 which stayed the 

Division’s suspension of the filing. On 

November 16, 2018 the Commission 

granted the Exchange’s Petition for 

Review but discontinued the automatic 

stay.15

The Healthy Markets and SIFMA 

Comment Letters (collectively, the 

‘‘Comment Letters’’) argued that the 

Exchange did not provide sufficient 

information in its filing to support a 

finding that the proposal is consistent 

with the Act. Specifically, the Comment 

Letters objected to the Exchange’s 

reliance on the fees of other exchanges 

to demonstrate that its fee increases are 

consistent with the Act. In addition, the 

Comment Letters argued that the 

Exchange did not offer any details to 

support its basis for asserting that the 

proposed fees are consistent with the 

Act. The Exchange is now re-filing the 

proposed fees and is also providing 

additional detail regarding the basis for 

the proposed fees. The proposed rule 

change is immediately effective upon 

filing with the Commission pursuant to 

Section 19(b)(3)(A) of the Act. 

The Exchange has always offered 

various bandwidth choices for physical 

connectivity to the Exchange for 

Participants and non-Participants to 

access the Exchange’s trading platforms, 

market data, test systems and disaster 

recovery facilities. These physical 

connections consist of 10Gb and non10Gb connections, where the 10Gb 

connection provides for faster 

processing of messages sent to it in 

comparison to the non-10Gb 

connection. While the Exchange has not 

charged for physical connectivity 

before, the Exchange believes that it is 

reasonable and appropriate to begin 

charging for this physical connectivity 

to partially offset the costs associated 

with maintaining and enhancing a stateof-the-art exchange network 

infrastructure in the U.S. options 

industry. There are significant costs 

associated with various projects and 

initiatives to improve overall network 

performance and stability, as well as 

costs paid to the third-party data center 

for space rental, power used, etc. The 

Exchange notes that unlike other 

options exchanges, the Exchange does 

not own and operate its own data center 

and therefore cannot control data center 

costs. 

The Exchange also notes that all other 

options exchanges charge for similar 

physical connectivity,16 and by 


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17 15 U.S.C. 78f(b)(4) and (5). 

18See supra note 8. 

19 Id. 

20 15 U.S.C. 78s(b)(3)(C). 

21 15 U.S.C. 78s(b)(1). 

22See supra note 9, and accompanying text. 

23See supra note 10. 

24See Securities Exchange Act Release No. 84168 

(September 17, 2018), 83 FR 47947 (September 21, 

2018) (‘‘Order Instituting Proceedings’’). 

25See supra note 12. 

26 17 CFR 201.430. 

27See supra notes 13–14, and accompanying text. 

Pursuant to Rule 431(e) of the Commission’s Rules 

of Practice, a notice of intention to petition for 

review results in an automatic stay of the action by 

delegated authority. 17 CFR 201.431(e). 

28See supra note 15, and accompanying text. 

29See Securities Exchange Act Release No. 84614 

(November 16, 2018), 83 FR 59432 (November 23, 

2018). 

30See letters to Brent J. Fields, Secretary, 

Commission, from Lisa J. Fall, President, BOX, 

dated December 7, 2018, and Amir C. Tayrani, 

Gibson, Dunn & Crutcher LLP, dated December 10, 

2018. 

31See Order Instituting Proceedings, supra note 

24. 

32See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

suspending the Exchange’s initial fee 

filing the Division has placed the 

Exchange at a competitive disadvantage 

within the U.S. options industry. 

Without these fees to partially offset the 

costs associated with maintaining and 

enhancing a state-of-the-art exchange 

network infrastructure in the US options 

industry, the Exchange may not be able 

to make the planned enhancements to 

its infrastructure. 

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,17 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. 

The Exchange believes that the 

proposed Connectivity Fees in general 

constitute an equitable allocation of 

fees, and are not unfairly 

discriminatory, because they allow the 

Exchange to recover costs associated 

with offering access through the 

network connections. The proposed 

Connectivity Fees are also expected to 

offset the costs both the Exchange and 

BOX incur in maintaining and 

implementing ongoing improvements to 

the trading systems, including 

connectivity costs, costs incurred on 

software and hardware enhancements 

and resources dedicated to software 

development, quality assurance, and 

technology support. The Exchange 

believes that its proposed fees are 

reasonable in that they are comparable 

to those charged by another exchange 

and lower than those charged by several 

other exchanges. Further, the Exchange 

believes that the proposed Connectivity 

Fees are not unfairly discriminatory as 

they are assessed to all market 

participants who wish to connect to the 

BOX network. 

The Exchange believes that the 

proposed HSVF Port Fee is reasonable 

as it is similar to fees assessed at 

another exchange in the industry.18

Further, the Exchange believes that 

charging Participants and nonParticipants for both the HSVF monthly 

fee and applicable physical connection 

fees as outlined in the example above is 

reasonable as it is in line with another 

exchange in the industry.19 Further, the 

Exchange believes that the proposed 

change is equitable and not unfairly 

discriminatory because it allows the 

Exchange to recoup ongoing 

expenditures made by the Exchange in 

order to offer such services to 

Participants and non-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. Unilateral 

action by the Exchange in establishing 

fees for services provided to its 

Participants and others using its 

facilities will not have an impact on 

competition. As a small exchange in the 

already highly competitive environment 

for options trading, the Exchange does 

not have the market power necessary to 

set prices for services that are 

unreasonable or unfairly discriminatory 

in violation of the Exchange Act. The 

Exchange’s proposed fees, as described 

herein, are comparable to and generally 

lower than fees charged by other options 

exchanges for the same or similar 

services. Lastly, the Exchange believes 

the proposed change will not impose a 

burden on intramarket competition as 

the proposed fees are applicable to all 

Participants and others using its 

facilities that connect to BOX. 

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. Suspension of the Proposed Rule 

Change 

Pursuant to Section 19(b)(3)(C) of the 

Act,20 at any time within 60 days of the 

date of filing of a proposed rule change 

pursuant to Section 19(b)(1) of the 

Act,21 the Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) 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. As discussed below, the 

Commission believes a temporary 

suspension of the proposed rule change 

is necessary and appropriate to allow for 

additional analysis of the proposed rule 

change’s consistency with the Act and 

the rules thereunder. 

Identical fee changes to those 

proposed herein were originally filed on 

July 19, 2018. That proposal, BOX– 

2018–24, was published for comment in 

the Federal Register on August 2, 

2018.22 The Commission received one 

comment letter on that proposal.23 On 

September 17, 2018, pursuant to Section 

19(b)(3)(C) of the Act, the Commission: 

(1) Temporarily suspended the 

proposed rule change; and (2) instituted 

proceedings to determine whether to 

approve or disapprove the proposal.24

The Commission received one 

additional comment letter on that 

proposal in response to the Order 

Instituting Proceedings.25 On September 

19, 2018, pursuant to Rule 430 of the 

Commission’s Rules of Practice,26 the 

Exchange filed a notice of intention to 

petition for review of the Order 

Instituting Proceedings and, on 

September 26, 2018, the Exchange filed 

a petition for review of the Order 

Instituting Proceedings.27 On November 

16, 2018, the Commission granted the 

Exchange’s Petition and discontinued 

the automatic stay of delegated action.28

In addition, the Commission ordered 

that any party or other person could file 

a statement in support or in opposition 

to the action made by delegated 

authority provided such statement was 

filed on or before December 10, 2018.29

The Commission received two such 

statements from the Exchange.30 The 

instant filing proposes identical fees and 

raises similar concerns as to whether 

they are consistent with the Act.31

When exchanges file their proposed 

rule changes with the Commission, 

including fee filings like the Exchange’s 

present proposal, they are required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.32 The 


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33 Id. 

34 15 U.S.C. 78f(b)(4). 

35 15 U.S.C. 78f(b)(5). 

36 15 U.S.C. 78f(b)(8). 

37See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 

38For purposes of temporarily suspending the 

proposed rule change, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

39 15 U.S.C. 78s(b)(3)(C). Once the Commission 

temporarily suspends a proposed rule change, 

Section 19(b)(3)(C) of the Act requires that the 

Commission institute proceedings under Section 

19(b)(2)(B) to determine whether a proposed rule 

change should be approved or disapproved. 

40 15 U.S.C. 78s(b)(2)(B). 

41 15 U.S.C. 78s(b)(2)(B). 

42 15 U.S.C. 78f(b)(4). 

43 15 U.S.C. 78f(b)(5). 

44 15 U.S.C. 78f(b)(8). 

45See supra Section II.A.1. 

46See id. 

47See supra Section II.A.2. 

48Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

49See id. 

50See id. 

51See 15 U.S.C. 78f(b)(4), (5), and (8). 

52 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act 

grants the Commission flexibility to determine what 

type of proceeding—either oral or notice and 

opportunity for written comments—is appropriate 

instructions to Form 19b–4, on which 

exchanges file their proposed rule 

changes, specify that such statement 

‘‘should be sufficiently detailed and 

specific to support a finding that the 

proposed rule change is consistent with 

[those] requirements.’’ 33

Among other things, exchange 

proposed rule changes are subject to 

Section 6 of the Act, including Sections 

6(b)(4), (5), and (8), which requires the 

rules of an exchange to (1) provide for 

the equitable allocation of reasonable 

fees among members, issuers, and other 

persons using the exchange’s 

facilities; 34 (2) perfect the mechanism of 

a free and open market and a national 

market system, protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers; 35 and (3) not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.36

In temporarily suspending the 

Exchange’s fee change, the Commission 

intends to further consider whether the 

proposed fees to connect to the 

Exchange are consistent with the 

statutory requirements applicable to a 

national securities exchange under the 

Act. In particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; not permit unfair 

discrimination between customers, 

issuers, brokers or dealers; and do not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act.37

Therefore, the Commission finds that 

it is appropriate in the public interest, 

for the protection of investors, and 

otherwise in furtherance of the purposes 

of the Act, to temporarily suspend the 

proposed rule change.38

IV. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Rule Change 

The Commission is instituting 

proceedings pursuant to Sections 

19(b)(3)(C) 39 and 19(b)(2)(B) of the 

Act 40 to determine whether the 

proposed rule change should be 

approved or disapproved. Institution of 

proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. Rather, the Commission 

seeks and encourages interested persons 

to provide additional comment on the 

proposed rule change to inform the 

Commission’s analysis of whether to 

disapprove the proposed rule change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,41 the Commission is providing 

notice of the grounds for possible 

disapproval under consideration: 

• Section 6(b)(4) of the Act, which 

requires that the rules of a national 

securities exchange ‘‘provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members and issuers and other persons 

using its facilities,’’ 42

• Section 6(b)(5) of the Act, which 

requires, among other things, that the 

rules of a national securities exchange 

be designed to ‘‘perfect the mechanism 

of a free and open market and a national 

market system’’ and ‘‘protect investors 

and the public interest,’’ and not be 

‘‘designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers,’’ 43 and 

• Section 6(b)(8) of the Act, which 

requires that the rules of a national 

securities exchange ‘‘not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of [the Act].’’ 44

As noted above, the proposal imposes 

new fees for physical connections to the 

Exchange. The Exchange states that 

these fees would partially offset costs 

associated with maintaining and 

enhancing this technology.45 In the 

instant filing the Exchange states that its 

associated costs relate to costs paid to 

the Exchange’s third-party data center 

and costs associated with projects and 

initiatives designed to improve overall 

network performance and stability.46

The Exchange also states that these fees 

are expected to offset costs of 

maintaining and implementing ongoing 

improvements to BOX’s trading systems, 

including connectivity costs, costs 

incurred on software and hardware 

enhancements, and resources dedicated 

to software development, quality 

assurance, and technology support.47

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the [Act] and the rules 

and regulations issued thereunder . . . 

is on the [SRO] that proposed the rule 

change.’’ 48 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,49 and 

any failure of an SRO to provide this 

information may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Act and the applicable rules 

and regulations.50

The Commission is instituting 

proceedings to allow for additional 

consideration and comment on the 

issues raised herein, including as to 

whether the proposed fees are 

consistent with the Act, and 

specifically, with its requirements that 

exchange fees be reasonable and 

equitably allocated; be designed to 

perfect the mechanism of a free and 

open market and the national market 

system, protect investors and the public 

interest, and not be unfairly 

discriminatory; or not impose an 

unnecessary or inappropriate burden on 

competition.51

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. Such 

comments should be submitted by 

January 10, 2019. Rebuttal comments 

should be submitted by January 24, 

2019. Although there do not appear to 

be any issues relevant to approval or 

disapproval which would be facilitated 

by an oral presentation of views, data, 

and arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.52


khammond on DSK30JT082PROD with NOTICES
Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Notices 65385 

for consideration of a particular proposal by an 

SRO. See Securities Acts Amendments of 1975, 

Report of the Senate Committee on Banking, 

Housing and Urban Affairs to Accompany S. 249, 

S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 

53 15 U.S.C. 78s(b)(3)(C). 

54 17 CFR 200.30–3(a)(12), (57), and (58). 

1Applicants request relief with respect to any 

existing or future series of the Trust and any other 

existing or future registered open-end management 

company or series thereof that intends to rely on the 

requested order and that: (a) Is advised by the 

Adviser, or any person controlling, controlled by or 

under common control with the Adviser or its 

successors; (b) uses the multi-manager structure 

described in the application; and (c) complies with 

the terms and conditions of the application (each, 

Continued 

The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Interested persons are invited to submit 

written data, views, and arguments 

concerning the proposed rule change, 

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 rule-comments@

sec.gov. Please include File Number SR– 

BOX–2018–37 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–2018–37. 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 

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 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. 

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–2018–37 and should 

be submitted on or before January 10, 

2019. Rebuttal comments should be 

submitted by January 24, 2019. 

VI. Conclusion 

IT IS THEREFORE ORDERED, 

pursuant to Section 19(b)(3)(C) of the 

Act,53 that File 

Number SR–BOX–2018–37 be and 

hereby is, temporarily suspended. In 

addition, the Commission is instituting 

proceedings to determine whether the 

proposed rule change should be 

approved or disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.54

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27512 Filed 12–19–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

33323; 812–14893] 

Investment Managers Series Trust and 

361 Capital, LLC 

December 14, 2018. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application under section 

6(c) of the Investment Company Act of 

1940 (‘‘Act’’) for an exemption from 

section 15(a) of the Act and rule 18f–2 

under the Act, as well as from certain 

disclosure requirements in rule 20a–1 

under the Act, Item 19(a)(3) of Form N– 

1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 

22(c)(8) and 22(c)(9) of Schedule 14A 

under the Securities Exchange Act of 

1934, and sections 6–07(2)(a), (b), and 

(c) of Regulation S–X (‘‘Disclosure 

Requirements’’). The requested 

exemption would permit an investment 

adviser to hire and replace certain subadvisers without shareholder approval 

and grant relief from the Disclosure 

Requirements as they relate to fees paid 

to the sub-advisers. 

APPLICANTS: Investment Managers 

Series Trust (the ‘‘Trust’’), a Delaware 

statutory trust registered under the Act 

as an open-end management investment 

company, and 361 Capital, LLC (the 

‘‘Adviser’’), a Delaware limited liability 

company registered as an investment 

adviser under the Investment Advisers 

Act of 1940 (together with the Trust, the 

‘‘Applicants’’). 

FILING DATES: The application was filed 

on April 5, 2018 and amended on 

August 16, 2018. 

HEARING OR NOTIFICATION OF HEARING: 

An order granting the application will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on January 8, 2019, and 

should be accompanied by proof of 

service on the applicants, in the form of 

an affidavit or, for lawyers, a certificate 

of service. Pursuant to rule 0–5 under 

the Act, hearing requests should state 

the nature of the writer’s interest, any 

facts bearing upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

Applicants: 235 West Galena Street, 

Milwaukee, WI 53212 and 4600 South 

Syracuse Street, Suite 500, Denver, 

Colorado 80237. 

FOR FURTHER INFORMATION CONTACT: 

Deepak T. Pai, Senior Counsel, at (202) 

551–6876, or Andrea Ottomanelli 

Magovern, Branch Chief, at (202) 551– 

6821 (Division of Investment 

Management, Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

website by searching for the file 

number, or an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Summary of the Application: 

1. The Adviser will serve as the 

investment adviser to the Subadvised 

Series pursuant to an investment 

advisory agreement with the Trust 

(each, an ‘‘Investment Management 

Agreement’’ and, collectively, the 

‘‘Investment Management 

Agreements’’).1 The Adviser will 


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