67520 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

011); 72689 (July 28, 2014), 79 FR 44917 (SR– 

EDGA–2014–16); and 72691 (July 28, 2014), 79 FR 

44892 (SR–EDGX–2014–19). 4See Letter from Sal Arnuk and Joe Saluzzi, 

Themis Trading LLC, to Elizabeth M. Murphy, 

Secretary, Commission, dated August 21, 2014; and 

Letter from Ira D. Hammerman, General Counsel, 

SIFMA, to Kevin M. O’Neill, Deputy Secretary, 

Commission, dated August 22, 2014 (letters 

commenting on SR–BATS–2014–18). 5See Securities Exchange Act Release Nos. 73101, 

79 FR 56418 (Sept. 19, 2014) (SR–BATS–2014–028); 

73102, 79 FR 56419 (Sept. 19, 2014) (SR–BYX– 

2014–011); 73098, 79 FR 56415 (Sept. 19, 2014) 

(EDGA–2014–16); and 73099, 79 FR 56418 (Sept. 

19, 2014) (SR–EDGX–2014–19). 

6 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). 

5Non-Auction Transactions are those transactions 

executed on the BOX Book. 

Two comments on the proposals have 

been received.4 On September 15, 2014, 

the Commission extended the time to 

act on the proposals until October 30, 

2014.5 On October 29, 2014, the 

Exchanges withdrew the proposals (SR– 

BATS–2014–028; SR–BYX–2014–011; 

SR–EDGA–2014–16; SR–EDGX–2014– 

19). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26812 Filed 11–12–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73547; File No. SR–BOX– 

2014–25] 

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 

November 6, 2014. 

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 October 

31, 2014, BOX Options Exchange LLC 

(the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘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 to amend 

the Fee Schedule [sic] 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 November 1, 2014. 

The text of the proposed rule change is 

available from the principal office of the 

Exchange, at the Commission’s Public 

Reference Room and also on the 

Exchange’s Internet Web site at http://

boxexchange.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to make a 

number of changes to the BOX Fee 

Schedule. 

Exchange Fees 

Non-Auction Transactions 

First, the Exchange proposes to 

amend Section I (Exchange Fees) to 

establish a subsection entitled ‘‘NonAuction Transactions.’’ 5 The Exchange 

then proposes to adopt the current fee 

structure for Non-Auction Transactions 

in Select Symbols for all Non-Auction 

transactions on BOX. With this change 

the Select Symbols fee structure 

outlined in Section I.C. of the BOX Fee 

Schedule will be removed. 

Currently, Non-Auction Transactions 

in non-Select Symbols are subject to the 

fee structure outlined in Section I of the 

BOX Fee Schedule. For every NonAuction Transaction, Public Customers 

are assessed a $0.07 fee per contract and 

Professional Customers and Broker 

Dealers $0.42 per contract. Market 

Makers are assessed a per contract fee 

based upon the Market Maker’s Monthly 

ADV in all transactions executed on 

BOX, as calculated at the end of each 

month. All Non-Auction Transactions 

for that month are charged the same per 

contract fee according to the ADV 

achieved by the Market Maker, which 

ranges from $0.13 to $0.35. 

In proposed Section I.A. (NonAuction Transactions), the Exchange 

proposes to adopt a pricing model 

where the Exchange will assess 

transaction fees and credits dependent 

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. NonAuction Transactions in Penny Pilot 

Classes will also be assessed different 

fees or credits than Non-Auction 

Transactions in Non-Penny Pilot 

Classes. 

The Exchange also proposes to specify 

that these transactions will now be 

exempt from the Liquidity Fees and 

Credits outlined in Section II of the BOX 

Fee Schedule. The proposed fee 

structure for all Non-Auction 

Transactions is as follows: 

Account type Contra party 

Penny pilot classes Non-penny pilot classes 

Maker 

fee/credit 

Taker 

fee/credit 

Maker 

fee/credit 

Taker 

fee/credit 

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

Professional Customer/Broker Dealer.(0.22) (0.22) (0.57) (0.57) 

Market Maker ................................... (0.22) (0.22) (0.57) (0.57) 


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Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67521 

6Auction Transactions are those transactions 

executed through the Price Improvement Period 

(‘‘PIP’’), the Complex Order Price Improvement 

Period (‘‘COPIP’’), the Solicitation Auction 

mechanism, and the Facilitation Auction 

mechanism. All COPIP transactions will be charged 

per contract per leg. 7A PIP Order or COPIP Order is a Customer 

Order (an agency order for the account of either a 

customer or a broker-dealer) designated for the PIP 

or COPIP, respectively. An Agency Order is a blocksize order that an Order Flow Provider seeks to 

facilitate as agent through the Facilitation Auction 

or Solicitation Auction mechanism. 

Account type Contra party 

Penny pilot classes Non-penny pilot classes 

Maker 

fee/credit 

Taker 

fee/credit 

Maker 

fee/credit 

Taker 

fee/credit 

Professional Customer or Broker 

Dealer.

Public Customer ............................... 0.55 0.59 0.90 0.94 

Professional Customer/Broker Dealer.0.20 0.35 0.30 0.35 

Market Maker ................................... 0.20 0.39 0.30 0.39 

Market Maker .................................... Public Customer ............................... 0.51 0.55 0.85 0.90 

Professional Customer/Broker Dealer.0.00 0.05 0.00 0.10 

Market Maker ................................... 0.10 0.29 0.10 0.29 

For example, if a Public Customer 

submitted an order to the BOX Book in 

a Penny Pilot Class (making liquidity), 

the Public Customer would be credited 

$0.22 if the order interacted with a 

Market Maker’s order and the Market 

Maker (taking liquidity) would be 

charged $0.55. To expand on this 

example, if the Market Maker instead 

submitted an order to the BOX Book in 

a Penny Pilot Class (making liquidity), 

the Market Maker would be charged 

$0.51 if the order interacted with a 

Public Customer’s order and the Public 

Customer (taking liquidity) would again 

be credited $0.22. 

Tiered Volume Rebate for Non-Auction 

Transactions 

Accordingly, the Exchange proposes 

to adopt the same tiered volume-based 

rebate for Market Makers and Public 

Customers in Non-Auction Transactions 

that was previously applied to NonAuction Transactions in Select Symbols. 

Specifically, Market Makers and Public 

Customers will receive a per contract 

rebate based on ADV considering all 

transactions executed on BOX by the 

Market Maker or Public Customer, 

respectively, as calculated at the end of 

each month. All Non-Auction 

Transactions for that month will receive 

the same per contract rebate according 

to the ADV achieved by the Market 

Maker or Public Customer. However, the 

Exchange proposes to specify that NonAuction Transactions where a Public 

Customer order interacts with another 

Public Customer order will be exempt 

from the per contract rebate listed 

below. These transactions will still 

count toward the Public Customer’s 

monthly ADV. 

The new per contract rebate for 

Market Makers and Public Customers in 

Non-Auction Transactions as set forth in 

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

will be as follows: 

Per contract 

rebate 

Market Maker Monthly ADV: 

100,001 contracts and greater ............................................................................................................................................... ($0.15) 

60,001 contracts to 100,000 contracts ................................................................................................................................... (0.10) 

35,001 contracts to 60,000 contracts ..................................................................................................................................... (0.07) 

10,001 contracts to 35,000 contracts ..................................................................................................................................... (0.03) 

1 contract to 10,000 contracts ................................................................................................................................................ 0.00 

Public Customer Monthly ADV: 

35,001 contracts and greater ................................................................................................................................................. (0.10) 

15,001 contracts to 35,000 contracts ..................................................................................................................................... (0.06) 

5,001 contracts to 15,000 contracts ....................................................................................................................................... (0.03) 

1 contract to 5,000 contracts .................................................................................................................................................. 0.00 

Auction Transactions 

The Exchange then proposes to 

amend Section I (Exchange Fees) to 

establish a subsection entitled ‘‘Auction 

Transactions.’’ 6 The Auction 

Transactions fees for Public Customers, 

Professional Customers and Broker 

Dealers will remain unchanged. For 

Market Makers, the Exchange proposes 

to adopt a fee of $0.20 for PIP Orders, 

COPIP Orders and Agency Orders.7

Currently Market Makers are assessed a 

per contract fee based upon the Market 

Maker’s Monthly ADV in all 

transactions executed on BOX, as 

calculated at the end of each month. All 

PIP, COPIP and Agency Orders for that 

month are charged the same per contract 

fee according to the ADV achieved by 

the Market Maker, which ranges from 

$0.13 to $0.35. The Exchange then 

proposes to remove the Tiered Fee 

Schedule for Market Makers based upon 

Monthly Average Daily Volume in 

current Section I.B. 

The new Auction Transactions as set 

forth in Section I.B. of the BOX Fee 

Schedule will be as follows: 


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67522 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

8An Improvement Order is a response to a PIP 

or COPIP auction. 

9A Primary Improvement Order is the matching 

contra order submitted to the PIP or COPIP on the 

opposite side of an agency order. 10 15 U.S.C. 78f(b)(4) and (5). 

11See International Securities Exchange LLC 

(‘‘ISE’’) Schedule of Fees, Section I. Regular Order 

Fees and Rebates for Standard Options, Non-Select 

Symbols (page 6); NASDAQ OMX PHLX, (‘‘PHLX’’), 

Pricing Schedule Section B, ‘‘Customer Rebate 

Program’’; and NYSE Arca, Inc (‘‘Arca’’) Options 

Fees and Charges, ‘‘Customer Monthly Posting 

Credit Tiers and Qualifications for Executions in 

Penny Pilot Issues’’ (page 4). 

Account type 

Public customer Professional customer Broker dealer Market maker 

PIP Order, COPIP Order, 

or Agency Order.

$0.00 ................................. $0.37 ................................. $0.37 ................................. $0.20 

Improvement Order in PIP 

or COPIP8.

0.15 ................................... 0.37 ................................... 0.37 ................................... 0.30 

Responses in the Solicitation or Facilitation Auction Mechanisms.0.15 ................................... 0.37 ................................... 0.37 ................................... 0.30 

Primary Improvement 

Order,9 Facilitation 

Order, or Solicitation 

Order.

Based on ADV, see Section I. B.1.Based on ADV, see Section I. B.1.Based on ADV, see Section I. B.1.Based on ADV, see Section I. B.1. 

Liquidity Fees and Credits 

Since all Non-Auction Transactions 

will now fall under Section I [sic] the 

new fee structure and be exempt from 

Section II Liquidity Fees and Credits, 

BOX proposes to remove subsection C 

(Non-Auction Transactions) from 

Section II. With the removal of 

subsection C, the Exchange proposes to 

move the bullet regarding nonimmediately marketable orders to 

Section II.A (PIP and COPIP 

Transactions). A non-immediately 

marketable order that executes against a 

PIP Order or a COPIP Order, therefore 

becoming an Unrelated Order, will 

continue to be charged as an 

Improvement Order for purposes of the 

BOX Fee Schedule. 

The Exchange then proposes to edit 

the language in proposed Section II.C, 

formerly Section II.D. (Exempt 

Transactions) and add the following fees 

for transactions which occur on the 

opening or re-opening of trading. For 

these transactions, which are deemed 

neither to ‘‘add’’ nor ‘‘remove’’ 

liquidity, the Exchange proposes to 

assess a flat fee per contract of $0.00 for 

Public Customers, $0.20 for Professional 

Customers and Broker Dealers and $0.12 

for Market Makers. The Exchange also 

proposes to clarify that outbound 

Eligible Orders routed to an Away 

Exchange, as defined in Rule 15000 

Series, remain subject to the fees 

outlined in Section IV. Eligible Orders 

Routed to an Away Exchange. 

Finally, the Exchange proposes to 

remove the ‘‘Select Symbols’’ language 

in Section II.C. (Exempt Transactions) 

that states that Non-Auction 

Transactions in Select Symbols will be 

considered exempt from all liquidity 

fees and credits. With the proposed 

changes, all Non-Auction Transactions 

will be considered exempt. 

MNX 

The Exchange also proposes to amend 

the Fee Schedule to remove the 

reference to the Mini Nasdaq 100 Index 

(NDX) [sic]. 

Because the Exchange has delisted the 

Mini-NDX® Index (MNX), the Exchange 

proposes to remove the reference to 

MNX from the BOX Fee Schedule. 

Currently, Section I (Exchange Fees) of 

the BOX Fee Schedule provides for a 

surcharge to be applied to options on 

any index traded on BOX; which 

includes a $0.22 per contract surcharge 

for options on MNX. The Exchange has 

since delisted options on MNX and they 

are no longer traded on BOX. As such, 

no related surcharge will apply and the 

Exchange is proposing to remove the 

reference from the BOX Fee Schedule. 

Other 

Finally, the Exchange is proposing to 

make additional non-substantive 

changes to the Fee Schedule. 

Specifically, the Exchange is 

renumbering certain footnotes, headings 

and internal references to accommodate 

the above proposed changes to the Fee 

Schedule. The Exchange also proposes 

to move the BOX Volume Rebate from 

current Section I.E of the Fee Schedule 

to proposed Section I.B (Auction 

Transactions). 

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,10 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 and credits 

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. 

Exchange Fees 

Non-Auction Transactions 

The Exchange believes adopting the 

current fee structure for Non-Auction 

Transactions in Select Symbols for all 

Non-Auction Transactions, regardless of 

symbol, is reasonable, equitable and not 

unfairly discriminatory. Even though 

the Select Symbol fee structure for NonAuction Transactions was only adopted 

last month, it was well received by 

Participants and the industry and the 

Exchange believes it is appropriate to 

now apply it to all Non-Auction 

Transactions. The proposed fee 

structure is intended to attract order 

flow to the Exchange by offering all 

market participants incentives to submit 

their Non-Auction orders to the 

Exchange. The practice of providing 

additional incentives to increase order 

flow is, and has been, a common 

practice in the options markets.11

Further, the Exchange believes it is 

appropriate to provide incentives for 

market participants which will result in 

greater liquidity and ultimately benefit 

all Participants trading on the Exchange. 

The Exchange also believes it is 

equitable, reasonable and not unfairly 

discriminatory to assess fees and credits 

according to the account type of the 

Participant originating the order and the 

contra party. This proposed fee 

structure was recently adopted by the 

Exchange for Non-Auction Transactions 


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Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67523 

12See Securities Exchange Act Release No. 73397 

(October 21, 2014), 79 FR 63982 (October 27, 2014) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change to Amend the Fee Schedule 

on the BOX Market LLC Options Facility). 

13See Securities Exchange Act Release No. 71312 

(January 15, 2014), 79 FR 3649 (January 22, 2014) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change To Amend the Fee Schedule 

To Establish Fees for Complex Order Price 

Improvement Period (‘‘COPIP’’) Transactions). 

14This type of structure was also adopted by 

NYSE Arca in 2012. See Securities Release No. 

68405 (December 11, 2012), 77 FR 74719 (December 

17, 2012) (SR–NYSEArca–2012–137). 

15Many U.S. Options Exchanges do not 

differentiate their fees between auction and nonauction transactions. However, the general range for 

Continued 

in Select Symbols 12 and is similar to the 

model adopted by the Exchange for 

Complex Orders Fees 13 and has been 

accepted by both the Commission and 

the industry.14 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 highest applicable fee on 

the Exchange’s schedule, which may, 

instead, be lowered or changed to a 

credit depending upon how the order 

interacts. This structure has been 

favorably received by the industry and 

BOX Participants; therefore the 

Exchange is proposing to apply the 

same structure to all Non-Auction 

Transactions. After adopting this type of 

structure for Non-Auction Transactions, 

a Public Customer submitting an order 

on the BOX Book will recognize that it 

will not pay a fee for these transactions 

and that depending upon with whom 

the order executes, the Public Customer 

may receive an additional benefit for 

submitting the order. Likewise, a 

Professional Customer or Broker Dealer 

submitting an order will recognize that 

it will not be charged more than $0.59 

in Penny Pilot issues and $0.94 in NonPenny Pilot issues. The same is true for 

Market Makers, who will recognize that 

their maximum charge when submitting 

a Non-Auction order will be $0.55 in 

Penny Pilot issues and $0.90 in NonPenny Pilot issues. 

The Exchange believes that the 

proposed fees and credits for Public 

Customers in Non-Auction Transactions 

are reasonable. Under the proposed fee 

structure Public Customers will either 

pay a Maker fee of $0.00 or receive a 

Maker/Taker credit of $0.22 for Penny 

Pilot classes and $0.57 for Non-Penny 

Pilot classes. These potential fees and 

credits are reasonable and will at all 

times be less than the current $0.07 

Exchange Fee that Public Customers pay 

in Non-Auction Transactions. 

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 when their orders execute 

against a non-Public Customer and, 

accordingly, charge non-Public 

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. 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 charging 

Professional Customers and Broker 

Dealers higher fees than Public 

Customers for 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 (submitting 

more than 390 standard orders per day 

on average). The Exchange believes that 

the higher level of trading activity from 

these Participants will draw a greater 

amount of BOX system resources than 

that of non-professional, Public 

Customers. Because this higher level of 

trading activity will result in greater 

ongoing operational costs, the Exchange 

aims to recover its costs by assessing 

Professional Customers and Broker 

Dealers higher fees for transactions. 

The Exchange also believes it is 

equitable and not unfairly 

discriminatory for BOX Market Makers 

to be assessed lower fees than 

Professional Customers and Broker 

Dealers for Non-Auction Transactions 

because of the significant contributions 

to overall market quality that Market 

Makers provide. Specifically, Market 

Makers can provide higher volumes of 

liquidity and lowering their fees will 

help attract a higher level of Market 

Maker order flow to the BOX Book and 

create liquidity, which the Exchange 

believes will ultimately benefit all 

Participants trading on BOX. As such, 

the Exchange believes it is appropriate 

that Market Makers be charged lower 

transaction fees than Professional 

Customers and Broker Dealers for NonAuction Transactions. 

The Exchange believes that the 

proposed fees and credits for all other 

Participants in Non-Auction 

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 either be charged a 

fee of $0.20 for Penny Pilot Classes or 

$0.30 for Non-Penny Pilot Classes. If the 

Professional Customer or Broker Dealer 

is instead taking liquidity in either 

Penny Pilot or Non-Penny Pilot Classes, 

it will be charged $0.35 if it interacts 

with a Professional Customer or Broker 

Dealer and $0.39 if it interacts with a 

Market Maker. The Exchange believes 

the fees listed above are reasonable as 

they are lower than the current $0.42 

Exchange Fee charged to Broker Dealers 

and Professional Customers in NonAuction Transactions. 

Similarly, in the proposed fee 

structure a Market Maker making 

liquidity in both Penny Pilot and NonPenny Pilot Classes will either be 

charged a fee of $0.00 for interacting 

with a Professional Customer or Broker 

Dealer or $0.10 for interacting with 

another Market Maker. If the Market 

Maker is instead taking liquidity, it will 

be charged $0.05 (for Penny Pilot 

Classes) and $0.10 (for Non-Penny Pilot 

Classes) if it interacts with a 

Professional Customer or Broker Dealer. 

If a Market Maker is taking liquidity and 

interacts with another Market Maker 

they will be charged $0.29 in all 

situations. The Exchange believes the 

fees listed above are reasonable as they 

are, in most situations, lower than the 

current $0.13 to $0.35 Exchange Fee 

range for Market Makers under the BOX 

Fee Schedule and are in line with what 

is currently charged by the industry.15


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67524 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

Market Maker fees is between $0.10 and $0.89. See 

NASDAQ OMX BX (‘‘BX’’) Options Pricing, Chapter 

XV, Sec. 2; BX charges both BX Options Market 

Makers and Non-Customer/Non-BX Options Market 

Makers a fee of $0.46 to remove liquidity in Penny 

Pilot Options and a fee of $0.89 to remove liquidity 

in Non-Penny Pilot Options, a fee to add liquidity 

in Penny Pilot Options of $0.40 to BX Options 

Market Makers and $0.45 to Non-Customer/Non-BX 

Options Market Makers, and a fee to add liquidity 

in Non-Penny Pilot Options of $0.50 to BX Options 

Market Makers (or $0.85 when interacting with 

Customer) and $0.88 for Non-Customer/Non-BX 

Options Market Makers. See NYSE Arca Options 

(‘‘Arca’’) Fees and Charges page 3; Arca charges 

NYSE Arca Market Makers $0.16 for manual 

executions, $0.49 to take liquidity in Penny Pilot 

Issues, and $0.87 to take liquidity in Non Penny 

Pilot Issues. See International Securities Exchange 

(‘‘ISE’’) Schedule of Fees, Section I; ISE charges 

Market Makers $0.10 for making liquidity in select 

symbols and $0.42 for taking liquidity in select 

symbols. 

16 Id. Professional Customer and Broker Dealers 

are also charged anywhere from $0.10 to $0.89 

within the option exchange fee schedules 

referenced above. 

17The ‘‘Make/Take’’ model is currently used by 

the International Securities Exchange LLC (‘‘ISE’) 

and NASDAQ OMX PHLX LLC (‘‘PHLX’’). 

18See Section B of the PHLX Pricing Schedule 

entitled ‘‘Customer Rebate Program’’ and CBOE’s 

Volume Incentive Program (VIP). CBOE’s Volume 

Incentive Program (‘‘VIP’’) pays certain tiered 

rebates to Trading Permit Holders for electronically 

executed multiply-listed option orders which 

include AIM orders. Note that these exchanges base 

these rebate programs on the percentage of total 

national Public Customer volume traded on their 

respective exchanges, which the Exchange is not 

proposing to do. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory for Professional 

Customers, Broker Dealers and Market 

Makers to be charged higher fees for 

both making and taking liquidity when 

interacting with Public Customers. In 

the proposed fee structure, a 

Professional Customer or Broker Dealer 

interacting with a Public Customer will 

be charged a $0.55 Maker fee or $0.59 

Taker fee for Penny Pilot Classes and a 

$0.90 Maker fee or $0.94 Taker fee for 

Non-Penny Pilot Classes. Similarly a 

Market Marker interacting with a Public 

Customer will be charged a $0.51 Maker 

fee or $0.55 Taker fee for Penny Pilot 

Classes and a $0.85 Maker fee or $0.90 

Taker fee for Non-Penny Pilot Classes. 

While these fees are higher than what 

these Participants are currently charged 

for Non-Auction Transactions in NonSelect Symbols, the Exchange believes 

they are reasonable as they are in line 

when compared to similar fees in the 

options industry.16 Further, as stated 

above, the Exchange believes charging a 

higher fee for interactions with a Public 

Customer is equitable and not unfairly 

discriminatory because it allows the 

Exchange to incentivize Public 

Customer order flow by offering credits 

to Public Customers in Non-Auction 

Transactions. The Exchange believes 

that providing incentives for NonAuction Transactions by Public 

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 for Professional 

Customers, Broker Dealers and Market 

Makers to be charged a higher fee for 

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.17

Further, the Exchange believes it is 

equitable and not unfairly 

discriminatory to charge the 

Professional Customer or Broker Dealer 

more for taking liquidity against a 

Market Maker than they are charged for 

taking liquidity against other 

Professional Customers or Broker 

Dealers. As stated above, the Exchange 

proposes to provide certain incentives 

to Market Makers because of the high 

volumes of liquidity they can provide 

and increasing fees for Professional 

Customers and Broker Dealers taking 

liquidity will allow the Exchange to 

offer these incentives, ultimately 

benefiting all Participants trading on 

BOX. 

Finally, the Exchange also believes it 

is reasonable to charge Professional 

Customers, Broker Dealers, and Market 

Makers less for certain executions in 

Penny Pilot issues compared to NonPenny 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. Additionally, the Exchange 

believes it is reasonable to give a greater 

credit to Public Customers for NonAuction Transactions in Non-Penny 

Pilot issues as compared to Penny Pilot 

issues. Since these classes have wider 

spreads and are less actively traded, 

giving a larger credit will further 

incentivize Public Customers to trade in 

these classes, ultimately benefitting all 

Participants trading on BOX. 

The Exchange believes that the 

proposed Non-Auction Transactions fee 

structure will keep the Exchange 

competitive with other exchanges and 

will be applied in an equitable manner 

among all BOX Participants. The 

Exchange believes the proposed fee 

structure is reasonable and competitive 

with fee structures in place on other 

exchanges. Further, the Exchange 

believes that the competitive 

marketplace impacts the fees proposed 

for BOX. 

Tiered Volume Rebate for Non-Auction 

Transactions 

BOX believes it is reasonable, 

equitable and not unfairly 

discriminatory to introduce tiered 

volume based rebates for Market Makers 

and Public Customers in all NonAuction Transactions. Other exchanges 

employ similar incentive programs,18

and the Exchange believes that its 

proposed volume thresholds and rebates 

are reasonable and competitive when 

compared to incentive structures at 

other exchanges. 

Additionally, the Exchange believes 

that the proposed volume thresholds are 

reasonable because they will incentivize 

Public Customers and Market Makers 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 believes 

that its proposed volume threshold and 

rebate is competitive when compared to 

rebate structures at other exchanges. 

Finally, the Exchange believes it is 

reasonable to exempt Non-Auction 

Transactions where a Public Customer 

order interacts with another Public 

Customer order from the per contract 

rebate. The Exchange does not believe a 

rebate in this situation is appropriate, as 

neither Public Customer will be paying 

a fee for the transaction. Further, these 

transactions will still count toward the 

Public Customer’s monthly ADV. 

The Exchange also believes it is 

equitable and not unfairly 

discriminatory to only adopt these 

structures for Public Customers and 

Market Makers. The proposed volume 

credits are intended to further 

encourage Public Customer and Market 

Maker Non-Auction order flow to the 

Exchange. Increased Public Customer 

and Market Maker volume will provide 

greater liquidity, which benefits all 

market participants on the Exchange. 

The practice of incentivizing increased 

Public Customer order flow is common 

in the options markets. Further, Market 

Makers also provide significant 

contributions to overall market quality. 

Specifically, Market Makers can provide 

high volumes of liquidity and lowering 

their Non-Auction Transaction fees will 

potentially help attract a higher level of 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67525 

19See supra, note 15. 

20See Securities Exchange Act Release No. 61342 

(January 13, 2010), 75 FR 3503 (January 21, 2014 

[sic]) (Notice of Filing and Immediate Effectiveness 

of a [sic] Proposed Rule Change to Amend [sic] the 

Fee Schedule of the Boston Options Exchange 

Facility). 

21See ISE Gemini, LLC (‘‘ISE Gemini’’) Schedule 

of Fees Section I. Footnote 4 and Section II. 

Footnote 4. See NASDAQ OMX BX, Inc. (‘‘BX’’) 

Chapter XV Options Pricing Sec. 2(2). See NASDAQ 

Options Market LLC (‘‘NOM’’) Chapter XV Options 

Pricing Sec. 2(2). 

Market Maker order flow and create 

liquidity, which the Exchange believes 

will ultimately benefit all Participants 

trading on BOX. 

Auction Transactions 

The Exchange believes it reasonable 

to remove the tiered fee structure for 

Market Makers based upon ADV. The 

tiered fee structure was adopted to 

incentivize Market Makers to direct 

order flow to the Exchange, which the 

Exchange believes is now unnecessary 

with the adoption of the new NonAuction Transactions fee structure as 

well as the Tiered Volume Rebates for 

Market Makers in Non-Auction 

Transactions. Additionally, in Auction 

Transactions Market Makers remain 

eligible for the BOX Volume Rebate for 

all PIP and COPIP Orders of 250 and 

under contracts. The Exchange believes 

it is reasonable to adopt a flat $0.20 per 

contract fee for Market Makers in PIP 

Orders, COPIP Orders, and Agency 

Orders. Specifically, the Exchange 

believes the fee strikes the appropriate 

balance between the $0.13 to $0.35 fees 

that Market Makers are currently 

charged for these orders and is 

reasonable when compared to similar 

fees among the industry.19 Finally, the 

Exchange believes it is equitable and not 

unfairly discriminatory to charge a 

Market Maker less for PIP Orders, 

COPIP Orders, and Agency Orders than 

what is charged to Professional 

Customers and Broker Dealers. 

Generally, Market Makers have 

obligations on BOX that other 

Participants do not. They must maintain 

active two-sided markets in the classes 

in which they are appointed and must 

meet certain minimum quoting 

requirements. Market Makers can also 

provide high volumes of liquidity and 

assessing lower transaction fee [sic] may 

help attract a higher level of Market 

Maker order flow and create liquidity, 

which the Exchange believes will 

ultimately benefit all Participants 

trading on BOX. 

Liquidity Fees and Credits 

The Exchange believes that exempting 

all Non-Auction Transactions from 

Section II (Liquidity Fees and Credits) is 

reasonable, equitable and not unfairly 

discriminatory. The Exchange’s 

Liquidity Fees and Credits are intended 

to attract order flow to the Exchange by 

offering incentives to all market 

participants to submit orders to the 

Exchange and the Exchange believes 

that the proposed fee structure will 

provide appropriate incentives to 

encourage Participants to submit NonAuction Transactions to the Exchange. 

The Exchange believes that exempting 

Non-Auction Transactions from 

liquidity fees and credits is reasonable 

compared to the similar fees and credits 

offered by the other exchanges. The 

Exchange believes exempting NonAuction Transactions from liquidity fees 

and credits is not unfairly 

discriminatory as the exemption from 

the liquidity fees and credits applies 

equally to all Participants on the 

Exchange. 

The Exchange believes it is reasonable 

edit [sic] the Exempt Transactions 

subsection and to assess a flat fee for 

transactions which occur on the 

opening or re-opening of trading and are 

deemed neither to ‘‘add’’ nor ‘‘remove’’ 

liquidity. With the proposed fee 

structure for Non-Auction Transactions, 

which assess fees and credits dependent 

upon whether the Participant is a 

liquidity provider or liquidity taker, 

transactions on the opening or reopening will not being [sic] charged an 

Exchange fee. For example, under the 

proposed Non-Auction fee structure a 

transaction on the opening would not be 

charged an Exchange Fee under Section 

I of the BOX Fee Schedule. Instead the 

Exchange is proposing to ensure that 

these transactions are assessed a fee. 

The Exchange has previously had this 

type of fee within the BOX Fee 

Schedule 20 and other exchanges with 

liquidity fees and credits also spell out 

how these transactions are treated 

within their respective fee schedules.21

The Exchange believes assessing a flat 

fee of $0.00 for Public Customers, $0.20 

for Professional Customers and Broker 

Dealers and $0.12 for Market Makers is 

in line with the Non-Auction 

Transactions fees outlined in the new 

fee structure. The Exchange believes it 

is equitable and not unfairly 

discriminatory for Public Customers to 

be charged no fee for transactions which 

occur on the opening or re-opening of 

trading. As stated above, the Exchange 

aims to improve markets by developing 

features for the benefit of its Public 

Customers. The Exchange also believes 

it is equitable and not unfairly 

discriminatory to charge a Market Maker 

less for these transactions than what is 

charged to Professional Customers and 

Broker Dealers; as stated above, Market 

Makers have obligations that other 

Participants do not and can also provide 

high volumes of liquidity that will 

ultimately benefit all Participants on the 

Exchange. 

MNX 

The Exchange believes it is reasonable 

to remove from the BOX Fee Schedule 

a reference to a fee that is no longer 

applicable as options on MNX have 

been delisted and are no longer traded 

on BOX. The Exchange also believes it 

is equitable and not unfairly 

discriminatory to remove all references 

to MNX as this applies equally to all 

Participants on 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. 

The Exchange believes that adopting 

the proposed fee structure for all NonAuction Transactions will not impose a 

burden on competition among various 

Exchange Participants. BOX currently 

assesses distinct standard contract 

Exchange Fees for different account and 

transaction types. The Exchange 

believes that applying a fee structure 

that is determined according to whether 

the order removes or adds liquidity, the 

account type of the Participant 

submitting the order, and the contra 

party will result in Participants being 

charged appropriately for these 

transactions. Submitting an order is 

entirely voluntary and Participants can 

determine which type of order they 

wish to submit, if any, to the Exchange. 

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. 


tkelley on DSK3SPTVN1PROD with NOTICES
67526 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

22 15 U.S.C. 78s(b)(3)(A)(ii). 

23 17 CFR 240.19b–4(f)(2). 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 22

and Rule 19b–4(f)(2) thereunder,23

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 rulecomments@sec.gov. Please include File 

Number SR–BOX–2014–25 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–2014–25. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–BOX– 

2014–25, and should be submitted on or 

before December 4, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26811 Filed 11–12–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73541; File No. SR–BX– 

2014–055] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Cancel-Replacement Orders and 

Routing 

November 6, 2014. 

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 October 

28, 2014, NASDAQ OMX BX, Inc. (‘‘BX’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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 add 

specificity to the Exchange’s options 

trading rules. The Exchange proposes to 

define cancel-replacement orders and 

also describe a route timer at in Chapter 

VI, entitled ‘‘Trading Systems.’’ 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

nasdaqomxbx.cchwallstreet.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

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 is proposing to amend 

Chapter VI to add additional specificity 

to its rules. The Exchange proposes to 

amend Section 1, Definitions, to define 

a cancel-replacement order. The 

Exchange proposes to amend Section 

11, Order Routing, to add greater 

specificity to the Rulebook concerning a 

route timer. 

Cancel-Replacement Orders 

A market participant today has the 

option of either sending in a cancel 

order and then separately sending in a 

new order which serves as a 

replacement of the original order (two 

separate messages) or sending a single 

cancel-replacement order in one 

message. 

If an order is submitted to the System 

and then subsequently a cancel order is 

sent to the System cancelling the 

original order, the original order will be 

cancelled by the System provided the 

original order was not already filled 

partially or in its entirety. A subsequent 

replacement order would be treated as 

a new order by the System and will not 


tkelley on DSK3SPTVN1PROD with NOTICES