Federal Register / Vol. 83, No. 115 / Thursday, June 14, 2018 / Notices 27807 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 83082 

(April 20, 2018), 83 FR 18379 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5 Id. 

6 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

Commission of any written comments 

that it receives. 

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 12 and paragraph (f) of Rule 

19b–4 thereunder.13 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

NSCC–2018–002 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–NSCC–2018–002. 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 NSCC and on NSCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC– 

2018–002 and should be submitted on 

or before July 5, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12752 Filed 6–13–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83398; File No. SR–FINRA– 

2018–013] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Designation 

of Longer Period for Commission 

Action on a Proposed Rule Change To 

Establish a Second Trade Reporting 

Facility in Conjunction With Nasdaq, 

Inc. 

June 8, 2018. 

On April 19, 2018, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a 

proposed rule change to establish a 

second Trade Reporting Facility to be 

operated in conjunction with Nasdaq, 

Inc. The proposed rule change was 

published for comment in the Federal 

Register on April 26, 2018.3 The 

Commission received no comment 

letters on the proposal. 

Section 19(b)(2) of the Act 4 provides 

that, within 45 days of the publication 

of the notice of the filing of a proposed 

rule change, or within such longer 

period up to 90 days as the Commission 

may designate if it finds such longer 

period to be appropriate and publishes 

its reasons for so finding or as to which 

the self-regulatory organization 

consents, the Commission shall either 

approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether the proposed rule change 

should be disapproved. The 45th day for 

this filing is June 10, 2018. The 

Commission is extending this 45-day 

time period. 

The Commission has determined that 

it is appropriate to designate a longer 

period within which to take action on 

the proposed rule change so that it has 

sufficient time to consider the issues 

raised by the proposed rule change. 

Accordingly, pursuant to Section 

19(b)(2) of the Act,5 the Commission 

designates July 25, 2018, as the date by 

which the Commission shall either 

approve, disapprove, or institute 

proceedings to determine whether to 

disapprove the proposed rule change 

(File No. SR FINRA–2018–013). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12753 Filed 6–13–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83396; File No. SR–BOX– 

2018–21] 

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 To 

Amend Fees and Rebates for NonAuction Transactions 

June 8, 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 31, 

2018, 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 


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3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 

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. 

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 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 June 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 

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 make 

changes to Section I. (Electronic 

Transaction Fees). 

Exchange Fees for Non-Auction 

Transactions 

The Exchange proposes to adjust 

certain fees for Non-Auction 

Transactions. Currently, for all nonauction transactions, fees and credits are 

assessed depending upon three factors: 

(i) The account type of the Participant 

submitting the order; (ii) whether the 

Participant is a liquidity provider or 

liquidity taker; and (iii) the account type 

of the contra party. Non-Auction 

Transactions in Penny Pilot Classes are 

assessed different fees or credits than 

Non-Auction Transactions in NonPenny Pilot Classes. 

The current fees for Non-Auction 

Transactions are: 

Account type Contra party 

Penny Pilot Classes Non-Penny Pilot Classes 

Maker fee Taker fee Maker fee Taker fee 

Public Customer ........................................ Public Customer ....................................... $0.05 $0.05 $0.05 $0.05 

Professional Customer/Broker Dealer ...... 0.05 0.05 0.05 0.05 

Market Maker ........................................... 0.05 0.05 0.05 0.05 

Professional Customer or Broker Dealer .. Public Customer .......................................

Professional Customer/Broker Dealer ......

0.60 

0.05 

0.45 

0.45 

0.95 

0.05 

0.85 

0.60 

Market Maker ........................................... 0.05 0.45 0.05 0.60 

Market Maker ............................................ Public Customer ....................................... 0.27 0.43 0.65 0.80 

Professional Customer/Broker Dealer ...... 0.00 0.29 0.00 0.40 

Market Maker ........................................... 0.00 0.29 0.00 0.40 

First, the Exchange proposes to 

remove the fees assessed for Public 

Customers that make or take liquidity 

against Public Customers in Penny Pilot 

and Non-Penny Pilot Classes. Next, the 

Exchange proposes to eliminate the fees 

assessed to Public Customers that make 

liquidity against Professional 

Customers/Broker Dealers and Market 

Makers in Penny Pilot and Non-Penny 

Pilot Classes. Lastly, the Exchange 

proposes to assess a $0.20 credit for 

Public Customers that take liquidity 

from Professional Customers/Broker 

Dealers and Market Makers in Penny 

Pilot Classes and a $0.50 credit for 

Public Customers that take liquidity 

from Professional Customers/Broker 

Dealers and Market Makers in NonPenny Pilot Classes. 

The Exchange proposes to adjust the 

fees assessed for Professional Customers 

and Broker Dealers. In Penny Pilot 

Classes, the Exchange proposes to adjust 

the fees assessed for Professional 

Customers and Broker Dealers that that 

take liquidity from all other 

Participants. Specifically, the Exchange 

proposes to increase the fee assessed to 

Professional Customers and Broker 

Dealers that take liquidity from Public 

Customers, Professional Customers/ 

Broker Dealers and Market Makers to 

$0.50 from $0.45 in Penny Pilot Classes. 

Additionally, the Exchange proposes to 

increase the fees assessed for 

Professional Customers and Broker 

Dealers making liquidity against 

Professional Customers and Broker 

Dealers and Market Makers in Penny 

Pilot Classes to $0.15 from $0.05. For 

Non-Penny Pilot Classes, the Exchange 

proposes to increase the fees assessed 

for Professional Customers and Broker 

Dealers making liquidity against NonPublic Customers to $0.15 from $0.05. 

The Exchange also proposes to increase 

the fees assessed for Professional 

Customers and Broker Dealers taking 

liquidity from Public Customers to 

$0.95 from $0.85 in Non-Penny Pilot 

Classes. Lastly, with regard to 

Professional Customers/Broker Dealers 

taking liquidity from Professional 

Customers/Broker Dealers and Market 

Makers in Non-Penny Pilot Classes, the 

Exchange proposes to increase the fees 

assessed to $0.85 from $0.60. 

The Exchange then proposes to adjust 

the fees assessed for Market Makers in 

Non-Auction Transactions. First, the 

Exchange proposes to increase the fees 

assessed on Market Makers making 

liquidity against a Public Customer to 

$0.50 from $0.27 in Penny Pilot Classes. 

With regard to Market Makers taking 

liquidity against Public Customers in 

Penny Pilot Classes, the Exchange 

proposes to increase the fee to $0.50 

from $0.43. Further, the Exchange 

proposes to increase the fee for Market 

Makers taking liquidity against 

Professional Customers and Broker 

Dealers and Market Makers in Penny 

Pilot Classes to $0.50 from $0.29. Lastly, 

the Exchange proposes to adjust the fees 

assessed to Market Makers in NonPenny Pilot Classes. Specifically, the 


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

6See Securities Exchange Release No. 73547 

(November 6, 2014), 79 FR 67520 (November 13, 

2014) (Notice of Filing and Immediate Effectiveness 

SR–BOX–2014–25). 

Exchange proposes to increase the fee 

assessed to a Market Maker when 

making liquidity from a Public 

Customer in Non-Penny Pilot Classes to 

$0.95 from $0.65. In Non-Penny Pilot 

Classes, the Exchange proposes to 

increase the fee assessed to Market 

Makers taking liquidity from a Public 

Customer to $0.95 from $0.80. Lastly, 

the Exchange proposes to increase the 

fees assessed to Market Makers taking 

liquidity from Professional Customers/ 

Broker Dealers and Market Makers in 

Non-Penny Pilot Classes to $0.75 from 

$0.40. 

The fees for Non-Auction 

Transactions will be as follows: 

Account type Contra party 

Penny Pilot Classes Non-Penny Pilot Classes 

Maker fee Taker fee Maker fee Taker fee 

Public Customer ........................................ Public Customer ....................................... $0.00 $0.00 $0.00 $0.00 

Professional Customer/Broker Dealer ...... 0.00 (0.20) 0.00 (0.50) 

Market Maker ........................................... 0.00 (0.20) 0.00 (0.50) 

Professional Customer or Broker Dealer Public Customer .......................................

Professional Customer/Broker Dealer 

0.60 

0.15 

0.50 

0.50 

0.95 

0.15 

0.95 

0.85 

Market Maker ........................................... 0.15 0.50 0.15 0.85 

Market Maker ............................................ Public Customer ....................................... 0.50 0.50 0.95 0.95 

Professional Customer/Broker Dealer ...... 0.00 0.50 0.00 0.75 

Market Maker ........................................... 0.00 0.50 0.00 0.75 

Tiered Volume Rebate for Non-Auction 

Transactions 

The Exchange proposes to amend 

Section I.A.1. of the BOX Fee Schedule, 

Tiered Volume Rebate for Non-Auction 

Transactions. Specifically, the Exchange 

proposes to adjust the rebates in the 

Tiered Volume Rebate for Public 

Customers in Non Auction 

Transactions. The current Tiered 

Volume Rebate for Public Customers in 

Non-Auction Transactions is as follows: 

Tier 

Percentage thresholds 

of national customer 

volume in multiplylisted options classes 

(monthly) 

Per contract rebate 

Penny Pilot Classes Non-Penny Pilot Classes 

Maker Taker Maker Taker 

1 ............. 0.000–0.129 ................................................................................................. $0.00 $0.00 $0.00 $0.00 

2 ............. 0.130–0.339 ................................................................................................. (0.05) (0.05) (0.20) (0.20) 

3 ............. 0.340–0.549 ................................................................................................. (0.15) (0.15) (0.30) (0.30) 

4 ............. 0.550 and Above ......................................................................................... (0.25) (0.25) (0.50) (0.50) 

The Exchange proposes to adjust 

certain maker and taker rebates in Tiers 

2 through 4 of the Tiered Volume Rebate 

structure for Public Customers in both 

Penny Pilot Classes and Non-Penny 

Pilot Classes. The new per contract 

rebate for Public Customers in NonAuction Transactions as set forth in 

Section I.A.1. of the BOX Fee Schedule 

will be as follows: 

Tier 

Percentage thresholds 

of national customer 

volume in multiplylisted options classes 

(monthly) 

Per contract rebate 

Penny Pilot Classes Non-Penny Pilot Classes 

Maker Taker Maker Taker 

1 ............. 0.000–0.129 ................................................................................................. $0.00 $0.00 $0.00 $0.00 

2 ............. 0.130–0.339 ................................................................................................. (0.05) (0.15) (0.15) (0.27) 

3 ............. 0.340–0.549 ................................................................................................. (0.10) (0.20) (0.30) (0.32) 

4 ............. 0.550 and Above ......................................................................................... (0.27) (0.27) (0.60) (0.40) 

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,5 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 proposed changes will allow the 

Exchange to be competitive with other 

exchanges and to apply fees, credits and 

rebates in a manner that is equitable 

among all BOX Participants. Further, 

the Exchange operates within a highly 

competitive market in which market 

participants can readily direct order 

flow to any other competing exchange if 

they determine fees at a particular 

exchange to be excessive. 

Non-Auction Transactions 

The Exchange believes it is equitable, 

reasonable and not unfairly 

discriminatory to assess fees according 

to the account type of the Participant 

originating the order and the contra 

party. This fee structure has been in 

place on the Exchange since 2014 and 

the Exchange is simply adjusting certain 

fees within the structure.6 The result of 

this structure is that a Participant does 

not know the fee it will be charged 

when submitting certain orders. 

Therefore, the Participant must 

recognize that it could be charged the 


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7 Id. See also Securities Exchange Act Release No. 

75350 (July 1, 2015), 80 FR 39169 (July 8, 2015) 

(SR–BOX–2015–24). 

8See Nasdaq ISE, LLC (‘‘ISE’’) Fee Schedule. On 

ISE, Professional Customers and Broker Dealers are 

charged $0.10 for making liquidity in Penny Pilot 

Classes and charged $0.46 for taking liquidity in 

Penny Pilot Classes. See also NYSE Arca Inc 

(‘‘Arca’’) Fee Schedule. Arca charges Professional 

Customers and Broker Dealers $1.10 for taking 

liquidity in Non-Penny Pilot Classes. 

9 Id. On ISE and Arca, the general range for 

Market Maker fees is between $0.10 and $1.10. The 

Exchange notes that Arca provides a rebate to 

Market Makers that post liquidity in both Penny 

and Non-Penny Pilot Classes. 

10 Id. On ISE and Arca, the general range for 

Broker Dealer and Professional Customer fees is 

between $0.10 and $1.10. The Exchange notes that 

Arca provides a rebate to Broker Dealers and 

Professional Customers that make liquidity in 

Penny and Non-Penny Pilot Classes. 

highest applicable fee on the Exchange’s 

schedule, which may, instead, be 

lowered depending upon how the order 

interacts. 

The Exchange believes removing nonauction transaction fees for Public 

Customers making or taking liquidity 

against Public Customers in Penny and 

Non-Penny Pilot Classes, as well as 

Public Customers making liquidity 

against Professional Customers, Broker 

Dealers and Market Makers is 

reasonable, equitable and not unfairly 

discriminatory. Further, the Exchange 

believes that providing a $0.20 and 

$0.50 credit to Public Customers that 

take liquidity from Professional 

Customers, Broker Dealers and Market 

Makers in Penny Pilot Classes and NonPenny Pilot Classes, respectively, is also 

reasonable, equitable and not unfairly 

discriminatory. The Exchange notes that 

it has either not charged or provided a 

credit to Public Customers for NonAuction Transactions on BOX in the 

past.7 Further, the Exchange believes 

providing a credit or charging no fee to 

Public Customers for all Non-Auction 

Transactions is equitable and not 

unfairly discriminatory. The securities 

markets generally, and BOX in 

particular, have historically aimed to 

improve markets for investors and 

develop various features within the 

market structure for Public Customer 

benefit. Accordingly, the Exchange 

believes that charging no fee or 

providing a credit for Public Customers 

is appropriate and not unfairly 

discriminatory. Public Customers are 

less sophisticated than other 

Participants and the credit will help to 

attract a high level of Public Customer 

order flow to the BOX Book and create 

liquidity, which the Exchange believes 

will ultimately benefit all Participants 

trading on BOX. 

Finally, the Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to give Public Customers 

a credit (or charge no fee) when their 

orders execute against a non-Public 

Customer and, accordingly, charge nonPublic Customers a higher fee when 

their orders execute against a Public 

Customer. As stated above, the 

Exchange aims to improve markets by 

developing features for the benefit of its 

Public Customers. Similar to the 

payment for order flow and other 

pricing models that have been adopted 

by the Exchange and other exchanges to 

attract Public Customer order flow, the 

Exchange increases fees to non-Public 

Customers in order to provide 

incentives for Public Customers. 

Further, the Exchange believes that 

providing a higher credit in Non-Penny 

Pilot Classes is reasonable. As discussed 

herein, Non-Penny Pilot Classes are 

traded less actively and the Exchange 

believes that providing this higher 

credit in Non-Penny Pilot Classes will 

provide incentive for Public Customers 

to trade in these classes. The Exchange 

believes that providing incentives for 

Non-Auction Transactions by Public 

Customers is reasonable and, ultimately, 

will benefit all Participants trading on 

the Exchange by attracting Public 

Customer order flow. 

The Exchange believes that the 

proposed fees for Professional 

Customers and Broker Dealers in NonAuction Transactions are reasonable. 

Under the proposed fee structure, a 

Professional Customer or Broker Dealer 

making liquidity and interacting with a 

Professional Customer, Broker Dealer or 

Market Marker will now be charged a 

fee of $0.15 in both Penny and NonPenny Pilot Classes. If the Professional 

Customer or Broker Dealer is instead 

taking liquidity in the Penny Pilot, it 

will be charged $0.50 against any other 

Participant. If the Professional Customer 

or Broker Dealer is taking liquidity in 

the Non-Penny Pilot, it will be charged 

$0.95 if it interacts with a Public 

Customer and $0.85 if it interacts with 

a Professional Customer/Broker Dealer 

or Market Maker. The Exchange believes 

that the proposed fees are reasonable as 

they are in line with the current fees 

assessed by another competing 

exchange.8

The Exchange believes that charging 

Professional Customers and Broker 

Dealers higher fees than Public 

Customers for their Non-Auction 

Transactions is equitable and not 

unfairly discriminatory. Professional 

Customers, while Public Customers by 

virtue of not being Broker Dealers, 

generally engage in trading activity 

more similar to Broker Dealer 

proprietary trading accounts. The 

Exchange believes that the higher level 

of trading activity from these 

Participants will draw a greater amount 

of BOX system resources; the Exchange 

aims to recover its costs by assessing 

Professional Customers and Broker 

Dealers higher fees for transactions. 

The Exchange believes that the 

proposed fees for Market Makers in 

Non-Auction Transactions are 

reasonable. With the proposed fee 

changes, a Market Maker making 

liquidity will now be charged a higher 

fee of $0.50 (Penny Pilot) and $0.95 

(Non-Penny Pilot) for interacting with a 

Public Customer. Further, a Market 

Maker taking liquidity against a Public 

Customer will now be charged $0.50 in 

Penny Pilot Classes and $0.95 in NonPenny Pilot Classes. If a Market Maker 

is taking liquidity in Penny Pilot Classes 

and interacts with a Professional 

Customer/Broker Dealer or Market 

Maker they will now be charged a fee 

of $0.50. Lastly, if a Market Maker is 

taking liquidity in Non-Penny Pilot 

Classes and interacts with a Professional 

Customer/Broker Dealer or Market 

Maker, they will now be charged $0.75. 

The Exchange believes the fees listed 

above are reasonable and appropriate as 

they are in line with what is currently 

charged by the industry.9

Further, the Exchange believes it is 

equitable and not unfairly 

discriminatory to charge the Market 

Maker equal or less for making or taking 

liquidity than Professional Customers or 

Broker Dealers. Specifically, Market 

Makers have certain obligations that 

other Participants do not and can 

ultimately provide more value by 

directing liquidity to the Exchange, 

which the Exchange believes will 

benefit all Participants trading on BOX. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory for Professional 

Customers, Broker Dealers and Market 

Makers to be charged higher fees when 

interacting with Public Customers than 

interacting with other Participants on 

BOX. The Exchange believes they are 

reasonable as they are in a similar range 

with the fees in the options industry.10

Further, as stated above, the Exchange 

believes charging a higher fee for 

interactions with a Public Customer 

when compared to interactions with 

other Participants is equitable and not 

unfairly discriminatory because it 

allows the Exchange to incentivize 

Public Customer order flow by offering 

low fees and rebate potential to Public 

Customers in Non-Auction 

Transactions. The Exchange believes 

that providing these incentives for NonAuction Transactions by Public 


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11See Section B of the PHLX Pricing Schedule 

entitled ‘‘Customer Rebate Program;’’ and Cboe 

Exchange, Inc. (‘‘CBOE’’) Volume Incentive Program 

(‘‘VIP’’). CBOE’s VIP pays certain tiered rebates to 

Trading Permit Holders for electronically executed 

multiply-listed option orders, which include AIM 

orders. 

Customers will benefit all Participants 

trading on the Exchange by attracting 

this Public Customer order flow. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory that Professional 

Customers, Broker Dealers and Market 

Makers be charged a higher fee for 

certain orders removing liquidity, when 

compared to the fee they receive for 

orders that add liquidity. Charging a 

lower fee for orders that add liquidity 

will promote liquidity on the Exchange 

and ultimately benefit all participants 

on BOX. Further, the concept of 

incentivizing orders that add liquidity 

over orders that remove liquidity is 

commonly accepted within the industry 

as part of the ‘‘Make/Take’’ liquidity 

model. 

The Exchange believes that providing 

a credit to Public Customers that take 

liquidity from Professional Customers/ 

Broker Dealers and Market Makers in 

Penny and Non-Penny Pilot Classes, 

compared to the $0.00 fee they are 

assessed when making liquidity against 

Professional Customers/Broker Dealers 

and Market Makers, is reasonable, 

equitable and not unfairly 

discriminatory. Instead of providing a 

credit for both making and taking 

liquidity, the Exchange believes the 

high credit for taking liquidity will 

attract Public Customer order flow to 

BOX which, in turn, will lead to more 

robust market making on the Exchange, 

thus benefitting all market participants. 

The securities markets generally, and 

BOX in particular, have historically 

aimed to improve markets for investors 

and develop various features within the 

market structure for Public Customer 

benefit. As such, the Exchange believes 

the proposed credit to Public Customers 

that take liquidity from Professional 

Customers/Broker Dealers and Market 

Makers in Penny and Non-Penny Pilot 

classes is reasonable. 

Finally, the Exchange also believes it 

is reasonable to charge Professional 

Customers and Broker Dealers and 

Market Makers less for certain 

executions in Penny Pilot issues 

compared to Non-Penny Pilot issues 

because these classes are typically more 

actively traded; assessing lower fees will 

further incentivize order flow in Penny 

Pilot issues on the Exchange, ultimately 

benefiting all Participants trading on 

BOX. 

Tiered Volume Rebate for Non-Auction 

Transactions 

BOX believes it is reasonable, 

equitable and not unfairly 

discriminatory to adjust certain rebates 

in the volume based thresholds for 

Public Customers in all Non-Auction 

Transactions. The volume based 

thresholds and applicable rebates are 

meant to incentivize Public Customers 

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; 11 and the 

Exchange believes that the proposed 

changes to the volume based rebates are 

reasonable and competitive when 

compared to incentive structures at 

other exchanges. 

The Exchange believes it is reasonable 

to offer a higher per contract rebate for 

transactions in Non-Penny Pilot Classes 

compared to Penny Pilot Classes 

because Non-Penny Pilot Classes are 

typically less actively traded and have 

wider spreads. The Exchange believes 

that offering a higher rebate will 

incentivize Public Customer order flow 

in Non-Penny Pilot issues on the 

Exchange, ultimately benefitting all 

Participants trading on BOX. 

The Exchange believes it is reasonable 

to adjust certain rebates in Tiers 2 

through 4 of the Tiered Volume Rebate 

for Public Customers making and taking 

liquidity in Non-Auction Transactions. 

The rebates are meant to incentivize 

Public Customers 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. 

The Exchange continues to believe it 

is equitable and not unfairly 

discriminatory to have these rebate 

structures for Public Customers in NonAuction transactions. The practice of 

incentivizing increased Public Customer 

order flow is common in the options 

markets. While the Exchange proposes 

to decrease some of the Public Customer 

rebates in Penny and Non-Penny Pilot 

Classes, the Exchange believes that 

Public Customers will still benefit from 

the opportunity to obtain a rebate. 

Additionally, most Public Customers 

currently achieve a volume based rebate 

in their Non-Auction transactions. 

Further, the Exchange believes that 

providing a higher per contract rebate 

for Public Customers taking liquidity in 

Penny and Non-Penny Pilot Classes 

compared to making liquidity is 

reasonable and appropriate. As 

discussed above, the Exchange believes 

the proposed rebates for taking liquidity 

in Penny and Non-Penny Pilot Classes 

will attract Public Customer order flow 

to BOX which, in turn, will lead to more 

robust market making on the Exchange, 

thus benefitting all market participants. 

As such, the Exchange believes that the 

proposed changes are reasonable and 

appropriate. 

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 believes that the 

proposed adjustments to fees in the 

Non-Auction Transactions fee structure 

will not impose a burden on 

competition among various Exchange 

Participants. Rather, BOX believes that 

the changes will result in the 

Participants being charged appropriately 

for these transactions and are designed 

to enhance competition in Non-Auction 

transactions on BOX. Submitting an 

order is entirely voluntary and 

Participants can determine which type 

of order they wish to submit, if any, to 

the Exchange. 

The Exchange believes that amending 

the proposed rebate structure for Public 

Customer Non-Auction Transactions 

will not impose a burden on 

competition among various Exchange 

Participants. The Exchange believes that 

the proposed changes will result in 

Public Customers being rebated 

appropriately for these transactions. 

Further, the Exchange believes that this 

proposal will enhance competition 

between exchanges because it is 

designed to allow the Exchange to better 

compete with other exchanges for order 

flow. 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing exchanges. In 

such an environment, the Exchange 

must continually review, and consider 

adjusting, its fees and credits to remain 

competitive with other exchanges. For 

the reasons described above, the 

Exchange believes that the proposed 

rule change reflects this competitive 

environment. 

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. 


daltland on DSKBBV9HB2PROD with NOTICES
27812 Federal Register / Vol. 83, No. 115 / Thursday, June 14, 2018 / Notices 

12 15 U.S.C. 78s(b)(3)(A)(ii). 

13 17 CFR 240.19b–4(f)(2). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 83153 (May 

2, 2018), 83 FR 20882 (May 8, 2018) (SR–FICC– 

2018–003) (‘‘Notice’’). 

4Letter from Ted Bragg, Vice President—Head of 

U.S. Fixed Income, Nasdaq (‘‘Nasdaq’’), dated May 

14, 2018, to Eduardo A. Aleman, Assistant 

Secretary, Commission (‘‘Nasdaq Letter’’) available 

at https://www.sec.gov/comments/sr-ficc-2018-003/ 

ficc2018003.htm. 

5Available at http://www.dtcc.com/legal/rulesand-procedures. 

6Notice, 83 FR at 20882. 

7 Id. at 20884. 

8 Id. 

9 Id. 

10 Id. 

11 Id. 

12 Id. 

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 12

and Rule 19b–4(f)(2) thereunder,13

because it establishes or changes a due, 

or fee. 

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 rule-comments@

sec.gov. Please include File Number SR– 

BOX–2018–21 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–2018–21. 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–BOX–2018–21, and should 

be submitted on or before July 5, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–12751 Filed 6–13–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83401; File No. SR–FICC– 

2018–003] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Order 

Approving Proposed Rule Change To 

Amend the Fee Structure of the 

Government Securities Division 

Rulebook 

June 8, 2018. 

On April 27, 2018, Fixed Income 

Clearing Corporation (‘‘FICC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–FICC–2018–003, 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder.2

The proposed rule change was 

published for comment in the Federal 

Register on May 8, 2018.3 The 

Commission received one comment 

letter on the proposed rule change.4 For 

the reasons discussed below, the 

Commission approves the proposed rule 

change. 

I. Description of the Proposed Rule 

Change 

The proposed rule change would 

amend the FICC Government Securities 

Division (‘‘GSD’’) Rulebook (‘‘GSD 

Rules’’) 5 to modify the GSD Fee 

Structure. FICC states that it designed 

the proposed rule change to reduce 

complexity and to better align pricing 

with the costs of services provided by 

GSD.6 More specifically, FICC states 

that the transaction processing fees and 

the position management fees associated 

with the delivery-versus-payment 

(‘‘DVP’’) service account for 

approximately 30 percent and 70 

percent, respectively, of GSD’s projected 

costs from the DVP service.7

Accordingly, FICC states that the 

proposed fee changes are designed to 

align GSD’s revenue with that 30/70 

percent split between transaction 

processing and position management 

costs, respectively.8 In doing so, FICC 

would shift the GSD Fee Structure 

regarding the DVP service away from 

the existing volume-driven approach to 

a position-based approach.9 Ultimately, 

FICC expects GSD’s net revenue to 

remain relatively unchanged as a result 

of this proposal.10

A. Proposed Changes to the GSD Fee 

Structure 

The proposed GSD Fee Structure 

would, in effect, establish 4 new fees, 

modify 1 existing fee, and eliminate 12 

fees.11 These proposed changes are 

summarized below. 

1. New Fees 

In proposed Section I of the GSD Fee 

Structure, FICC would replace the 

seven-tiered trade submission fees for 

both dealer accounts and broker 

accounts with a single transaction 

processing fee that would be charged to 

GSD members (‘‘Members’’) upon the 

comparison of a side of a buy/sell 

transaction or a Repo Transaction in the 

DVP service.12 Specifically, dealer 

accounts would be charged a fee of 

$0.04 per million par value for 

transaction processing, and broker 

accounts would be charged a fee of 


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