Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52241 

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 BOX Rule 7110(c)(6). 

6Public Customers and Professional Customers 

are not assessed fees for QCC transactions on BOX. 

The Exchange notes that, under this proposal, the 

QCC transaction fees will remain the same. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92980; File No. SR–BOX– 

2021–20] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the Fee 

Schedule on the BOX Options Market 

LLC Facility 

September 14, 2021. 

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 

September 1, 2021, BOX Exchange LLC 

(‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Exchange filed the proposed rule change 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act,3 and Rule 19b–4(f)(2) thereunder,4

which renders the proposal effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

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 

Options 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 September 1, 2021. 

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 amend the 

Fee Schedule for trading on BOX to 

amend Section I.D.1. (QCC Rebate). 

Specifically, the Exchange proposes to 

remove the current flat rate rebates for 

QCC transactions and establish a QCC 

rebate tier structure. 

By way of background, a Qualified 

Contingent Cross (‘‘QCC’’) transaction is 

comprised of an originating order to buy 

or sell at least 1,000 contracts, or 10,000 

mini-option contracts, that is identified 

as being part of a qualified contingent 

trade, coupled with a contra-side order 

or orders totaling an equal number of 

contracts.5 Currently, the Exchange 

assesses a fee of $0.17 per contract for 

Broker Dealers and Market Makers for 

all Agency Order, the originating order, 

and contra-side orders that are part of a 

QCC transaction.6 The Exchange 

currently applies a $0.14 per contract 

rebate to all QCC Agency Orders where 

at least one party to the QCC transaction 

is a Broker Dealer or Market Maker and 

a $0.22 per contract rebate to all QCC 

Agency Order when both parties to the 

QCC transaction are a Broker Dealer or 

Market Maker. The above rebates are 

paid to the Participant that entered the 

order into the BOX system. 

The Exchange now proposes to 

remove the flat rate QCC rebates 

currently in place and establish a tiered 

rebate structure where the amount of the 

rebate will be based off of incrementally 

increasing volume thresholds of QCC 

transactions on BOX. The Exchange 

notes that the way in which the rebates 

will be applied to the QCC transactions 

remains the same as it is today. The 

QCC rebates will still be applied to the 

QCC Agency Order when both parties to 

the QCC transaction are a Broker Dealer 

or Market Maker. Also, the rebate will 

continue to be paid to the Participant 

that entered the order into the BOX 

system when at least one party to the 

QCC transaction is a Broker Dealer or 

Market Maker. Under this proposal, the 

per contract rebate for QCC transactions 

will now be applied according to the 

volume threshold tier achieved. Volume 

thresholds will be calculated on a 

monthly basis by totaling the 

Participant’s QCC Agency Order volume 

on BOX. Specifically, the Exchange 

proposes the QCC Agency Order volume 

thresholds as follows: 

• To receive the rebate in Tier 1, a 

Participant must submit QCC Agency 

Orders totaling 0 to 1,499,999 contracts 

per month. 

• To receive the rebate in Tier 2, a 

Participant must submit QCC Agency 

Orders totaling 1,500,000 to 2,499,999 

contracts per month. 

• To receive the rebate in Tier 3, a 

Participant must submit QCC Agency 

Orders totaling 2,500,000 to 3,499,999 

contracts per month. 

• To receive the rebate in Tier 4, a 

Participant must submit QCC Agency 

Orders totaling 3,500,000 or more 

contracts per month. 

The proposed tiered rebate structure, 

including volume thresholds and 

applicable rebates, will be as follows: 

Tier QCC Agency Order volume on BOX 

(per month) 

Rebate 1 

(per contract) 

Rebate 2 

(per contract) 

1 ..................... 0 to 1,499,999 contracts ..................................................................................................... ($0.14) ($0.22) 

2 ..................... 1,500,000 to 2,499,999 contracts ....................................................................................... ($0.15) ($0.23) 

3 ..................... 2,500,000 to 3,499,999 contracts ....................................................................................... ($0.15) ($0.24) 

4 ..................... 3,500,000+ contracts ........................................................................................................... ($0.15) ($0.25) 

When only one side of the QCC 

transaction is a Broker Dealer or Market 

Maker, Rebate 1 will apply. When both 

parties to the QCC transaction are a 

Broker Dealer or Market Maker, Rebate 

2 will apply. If the Participant qualifies 

for both rebates, only the larger rebate 

52242 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

7The Exchange again notes that this is how BOX 

currently assesses the flat rate rebates for QCC 

transactions. 

8See Cboe EDGX Exchange, Inc. (‘‘CboeEDGX’’) 

Fee Schedule. The Exchange notes that the 

proposed volume thresholds are slightly higher 

than the volume thresholds at CboeEDGX. Also, the 

Exchange notes that the rebate amounts in Rebate 

1 and Rebate 2 differ slightly from CboeEDGX. 

Despite the differences, the Exchange believes the 

proposed rebate structure and rebates discussed 

herein are reasonable as they provide an 

incremental incentive for Participants to strive for 

the higher tier levels, which provide increasingly 

higher rebates for incrementally more QCC volume 

achieved, which the Exchange believes is a 

reasonably designed incentive for Participants to 

grow their QCC order flow to receive the enhanced 

rebates. Further, the Exchange notes that the QCC 

transaction fees at BOX will remain unchanged at 

$0.17 for Broker Dealer and Market Maker Agency 

Orders and Contra Orders for QCC Transactions. 

The Exchange notes that CboeEDGX assesses $0.20 

to Broker Dealers and Market Makers for Agency 

Orders and Contra Orders for QCC transactions. As 

such, the Exchange believes the proposed rebate 

structure and rebates is reasonable and appropriate. 

9 15 U.S.C. 78f(b)(4) and (5). 

10See supra note 8. 

will be applied to the Agency Order.7

The Exchange notes that a similar rebate 

structure and rebates for QCC 

transactions exist at another exchange.8

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,9 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 notes that it operates in 

a highly competitive market in which 

market participants can readily direct 

order flow to competing venues if they 

deem fee levels at a particular venue to 

be excessive or incentives to be 

insufficient. The Exchange is only one 

of several options venues to which 

market participants may direct their 

order flow, and it represents a small 

percentage of the overall market. The 

proposed changes reflect a competitive 

pricing structure designed to incentivize 

market participants to direct their QCC 

order flow, which the Exchange believes 

would enhance market quality to the 

benefit of all Participants. 

The Exchange believes the proposed 

changes to the QCC Rebate structure are 

reasonable because the proposed 

changes provide opportunities for 

Participants to receive higher rebates for 

incrementally increasing the 

Participant’s Agency QCC Order 

volume. The Exchange again notes that 

a volume-based incentive structure 

exists at another exchange,10 and 

believes that the proposed tiers are 

reasonable, equitable, and nondiscriminatory because they are open to 

all Participants on an equal basis. 

The Exchange believes the proposed 

QCC Rebate tiers are a reasonable means 

to encourage Participants to increase 

their liquidity on the Exchange, 

particularly in connection with 

additional QCC Agency Order flow to 

the Exchange in order to benefit from 

the proposed enhanced rebates. The 

Exchange believes that the proposed 

tiers are reasonable in that they provide 

an ample number of opportunities for a 

Participant to receive an enhanced 

rebate for qualifying orders. The 

proposed tiers provide an incremental 

incentive for Participants to strive for 

higher tier levels, which provide 

increasingly higher rebates for 

incrementally more QCC Agency Order 

volume achieved, which the Exchange 

believes is a reasonably designed 

incentive for Participants to grow their 

QCC order flow to receive the enhanced 

rebates. Further, the Exchange believes 

the proposed rebate structure is 

reasonable, as the fees assessed for QCC 

transactions on BOX will remain the 

same. 

The Exchange believes the proposed 

enhanced rebates are reasonable and 

proportionate with the difficulty of the 

proposed volume threshold criteria and 

that the tiers continue to provide an 

incremental incentive for Participants to 

strive for higher tier levels, which 

provides increasingly higher rebates for 

satisfying increasingly more stringent 

criteria. As noted above, the Exchange 

also believes the proposal to adopt two 

alternative rebates (depending on the 

capacity of the parties to the 

transaction) is reasonable as this is how 

the Exchange currently assesses the flat 

rate rebates for QCC transactions today. 

Lastly, the Exchange believes that the 

proposed changes represent an equitable 

allocation of fees and is not unfairly 

discriminatory because all Broker Dealer 

and Market Makers will be eligible for 

the proposed tiers and corresponding 

enhanced rebates. Additionally, the 

enhanced rebates will apply uniformly 

to the Participants that reach the 

proposed tiers. Further, the Exchange 

believes that applying the proposed 

rebates where at least one party to the 

QCC transaction is a Broker Dealer or 

Market Maker is reasonable, equitable, 

and not unfairly discriminatory because 

Public Customers and Professional 

Customers are not assessed fees for 

these transactions and, in turn, do not 

need the incentive of the rebate. As 

such, the Exchange believes the 

proposed changes are equitable and not 

unfairly discriminatory because the 

rebates potentially apply to all 

Participants that enter the originating 

order (except for when both the Agency 

Order and the Contra Order are Public 

Customers or Professional Customers) 

and because it is intended to incentivize 

the sending of more QCC Order to the 

Exchange. 

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. Rather, as 

discussed above, the Exchange believes 

that the proposed change would 

encourage the submission of additional 

order flow to a public exchange, thereby 

promoting market depth, execution 

incentives, and enhanced execution 

opportunities for all Participants. As a 

result, the Exchange believes that the 

proposed change furthers the 

Commission’s goal in adopting 

Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small. 

The Exchange believes that the 

proposed rule change does not impose 

any burden on intramarket competition 

that is not necessary or appropriate in 

furtherance of the Act. First, the 

Exchange notes that the proposed 

changes apply uniformly to similarly 

situated Participants. The Exchange 

believes that the proposed changes 

related to QCC transactions would not 

impose any burden on intramarket 

competition, but rather, serves to 

increase intramarket competition by 

incentivizing market participants, to 

direct their QCC orders to the Exchange, 

in turn providing for more opportunities 

to compete at improved prices. 

Additionally, the proposed rule change 

benefits all market participants as any 

overall increased liquidity that may 

result from the proposed tier incentives 

benefits all investors by offering 

additional flexibility for all investors to 

enjoy cost savings, supporting the 

quality of price discovery, promoting 

market transparency and improving 

investor protection. 

Next, the Exchange believes the 

proposed rule change does not impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As previously discussed, the Exchange 

operates in a highly competitive market. 

Participants have numerous alternative 

venues they may participate on and 

direct their order flow, including 15 

other options exchanges. Additionally, 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52243 

11See Cboe Global Markets U.S. Options Market 

Monthly Volume Summary (August 16, 2021), 

available at https://markets.cboe.com/us/options/ 

market_statistics/. 

12See supra note 8. 

13 15 U.S.C. 78s(b)(3)(A)(ii). 

14 17 CFR 240.19b–4(f)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

the Exchange represents a small 

percentage of the overall market. Based 

on publicly available information, no 

single options exchange has more than 

15% of the market share.11 Therefore, 

no exchange possesses significant 

pricing power in the execution of order 

flow. Indeed, participants can readily 

choose to send their orders to other 

exchanges and off-exchange venues if 

they deem fee levels at those other 

venues to be more favorable. As noted 

above, the Exchange believes that the 

proposed rebates under the QCC rebate 

tiers is comparable to that of another 

exchange offering QCC functionality.12

Moreover, the Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’. . . .’’. Accordingly, the 

Exchange does not believe the proposed 

change discussed herein imposes any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Exchange Act 13

and Rule 19b–4(f)(2) thereunder,14

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–2021–20 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–2021–20. 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–2021–20, and should 

be submitted on or before October 12, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–20215 Filed 9–17–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92972; File No. SR–BX– 

2021–039] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Delete the Order Audit 

Trail System Rules in the Equity 5 

Series of the Exchange’s Rulebook 

September 14, 2021. 

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 

September 3, 2021, Nasdaq BX, Inc. 

(‘‘BX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II, below, which Items have been 

prepared by the Exchange. 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to delete the 

Order Audit Trail System (‘‘OATS’’) 

rules in the Equity 5 Series of the 

Exchange’s rulebook that provides for 

the collection of information that is