39630 Federal Register / Vol. 82, No. 160 / Monday, August 21, 2017 / Notices 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Trading Floor’’ or ‘‘Options Floor’’ 

means the physical trading floor of the Exchange 

located in Chicago. The Trading Floor shall consist 

of at least one ‘‘Crowd Area’’ or ‘‘Pit’’. A Crowd 

Area or Pit shall be marked with specific visible 

boundaries on the Trading Floor, as determined by 

the Exchange. All series for a particular option class 

will be allocated to the same Crowd Area. A Floor 

Broker must open outcry an order in the 

corresponding Crowd Area. See BOX Rule 

100(a)(67). 

4See Securities Exchange Release No. 81292 

(August 2, 2017), 82 FR 37144 (August 8, 2017) 

(Order Approving SR–BOX–2016–48 as modified by 

Amendment Nos. 1 and 2). 

5See NYSE Arca Rule 6.2(b). There are no 

substantive differences between proposed Rule 

2120(a) and Arca Rule 6.2(b). 

6See NYSE Arca Rule 6.2(c).The Exchange notes 

that it is not copying NYSE Arca Rule 6.2(c)(1)(A– 

D), as the Exchange believes that the listed dress 

code requirements and restrictions are unnecessary. 

The Exchange believes the language in proposed 

Rule 2120(b)(1) is sufficient. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81398; File No. SR–BOX– 

2017–26] 

Self-Regulatory Organizations; BOX 

Options Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Adopt Rule 

2120 (Trading Conduct and Order & 

Decorum on the Trading Floor) and 

Amend Rule 12140 (Imposition of Fines 

for Minor Rule Violations) To Adopt 

Rule Violations and Sanctions 

Applicable to the Trading Floor 

August 15, 2017. 

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 August 9, 

2017, BOX Options Exchange LLC 

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

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the 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 adopt Rule 

2120, Trading Conduct and Order & 

Decorum on the Trading Floor, to enable 

the Exchange to enforce compliance 

with the Trading Conduct and Order & 

Decorum rules and amend Rule 12140 

(Imposition of Fines for Minor Rule 

Violations) to adopt violations and 

sanctions applicable to the Trading 

Floor. 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 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to (i) adopt Rule 2120 to 

enable the Exchange to establish and 

enforce compliance with trading 

conduct and order and decorum on the 

trading floor; and (ii) amend Rule 12140 

to adopt rule violations and sanctions 

applicable to the Trading Floor 3 under 

the Exchange’s Minor Rule Violation 

Plan (‘‘MRVP’’). The Exchange proposes 

these rules in conjunction with the 

approval of BOX’s recent filing to adopt 

rules for an open outcry Trading Floor.4

Proposed Rule 2120 

First, the Exchange proposes to adopt 

Rule 2120 which governs trading 

conduct and order & decorum on the 

Trading Floor. The Exchange proposes 

that Rule 2120(a) states [sic] that upon 

the determination of an Options 

Exchange Official that a Floor 

Participant’s conduct on the Trading 

Floor of the Exchange is such that it 

violates the provisions of (b) through (d) 

discussed below, impairs the 

maintenance of a fair and orderly 

market, or impairs public confidence in 

the operations of the Exchange, a Floor 

Participant of the Exchange may be 

fined pursuant to the Bylaws and Rules 

of the Exchange. This shall also apply 

to a Floor Participant’s failure to 

adequately supervise an employee to 

ensure his compliance with this rule. A 

Floor Participant adversely affected by a 

determination made under this Section 

may obtain review thereof in accordance 

with the provisions of the Rule 12000 

Series. Fines imposed by an Options 

Exchange Official hereunder shall not 

preclude further disciplinary action by 

the Exchange pursuant to the Bylaws 

and Rules of the Exchange. The 

Exchange notes that this rule is based on 

the rules of NYSE Arca (‘‘Arca’’).5

Next, the Exchange proposes Rule 

2120(b) which governs the Standards of 

Dress and Conduct. The Exchange 

proposes that all Floor Participants are 

required to act in a manner consistent 

with a fair and orderly market and with 

the maintenance of public confidence in 

the Exchange. Accordingly, the 

Exchange proposes appropriate 

standards pertaining to dress and 

conduct on the Trading Floor. Proposed 

Rule 2120(b)(1) details the Standards of 

Dress on the Trading Floor. Specifically, 

all persons on the Trading Floor, 

whether Floor Participants, employees 

of Floor Participants or visitors, shall at 

all times, whether prior to, during or 

after trading sessions, be dressed in a 

manner appropriate for business 

purposes and in accordance with good 

taste and professional standards. The 

term ‘‘good taste’’ shall be interpreted in 

a conservative manner. The Exchange 

may impose additional standards of 

dress or otherwise modify these 

standards of dress by means of a written 

policy that will be distributed to Floor 

Participants. The Exchange again notes 

that this provision is based on the rules 

of Arca.6

Next, the Exchange proposes to adopt 

2120(b)(2) which governs the Standard 

of Conduct on the Trading Floor. 

Specifically, all persons on the Trading 

Floor are required to conduct 

themselves in accordance with a seemly 

and professional standard of behavior. 

Further, no person while on the Trading 

Floor shall: (i) Engage in any act or 

practice that may be detrimental to the 

interest or welfare of the Exchange; or 

(ii) engage in any act or practice that 

may serve to disrupt or hinder the 

ordinary and efficient conduct of 

business; or (iii) engage in any act or 

practice that may serve to jeopardize the 

safety or welfare of any other 

individual; or (iv) act in a disorderly 

manner, which includes, but is not 

limited to, the use of abusive or 

indecorous language. Further, with 

regard to the Standards of Conduct 

provision, the Exchange further 

proposes that (i) the entry of food or 

drink may be permitted at the discretion 

of the Exchange and that alcoholic 

beverages may not be consumed on the 

Trading Floor at any time; (ii) Smoking 


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7This prohibition shall apply at all times whether 

or not the Trading Floor is in session. 

8See Arca Rule 6.2(c)(2). The Exchange notes that 

there are no substantive differences between 

proposed Rule 2120(b)(2) and Arca Rule 6.2(c)(2). 

9See Arca Rule 6.2(d)(1). The Exchange notes that 

there are no substantive differences between 

proposed Rule 2120(c)(1) and Arca Rule 6.2(d)(1). 

10See Arca Rule 6.2(d)(2). The Exchange notes 

that there are no substantive differences between 

proposed Rule 2120(c)(2) and Arca Rule 6.2(d)(2). 

11See Arca Rule 6.2(e). The Exchange notes a few 

minor differences between the proposed rules 

regarding visitors on the BOX Trading Floor and 

those rules of Arca. First, the Exchange did not 

copy any reference to an ‘‘OTP Firm floor 

manager,’’ as such managers or their equivalent are 

not present on the BOX Trading Floor. Second, the 

Exchange notes that there is a small difference 

between proposed Rule 2120(d)(5) and Arca Rule 

6.2(e)(6). The Exchange proposes to allow the 

Exchange to restrict visiting on the Trading Floor 

in any manner at any time while Arca gives this 

authority to the Options Floor Manager. The 

Exchange notes that it did not copy this language 

as an Options Floor Manager or its equivalent does 

not exist on the BOX Trading Floor. Third, the 

Exchange notes that it did not copy Arca Rules 

6.2(e)(4) and (7), as these rules do not apply to the 

BOX Trading Floor. While all visitors are allowed 

on the BOX Trading Floor, they must be invited by 

the Exchange or a Floor Participant. See proposed 

Rule 2120(d)(1). Arca Rule 6.2(e)(4) allows OTP 

Holders and OTP Firms who are not normally 

engaged on the Options Trading Floor to visit 

without an invitation. The Exchange believes that 

this distinction is unnecessary as all visitors to the 

BOX Trading Floor must be invited by a Floor 

Participant or a member of the Exchange staff 

pursuant to proposed Rule 2120(d)(1). Further, Arca 

Rule 6.2(e)(7) states that a group of visitors 

comprising more than fifteen persons may not enter 

the Trading Floor without prior approval of the 

Exchange. The Exchange believes that this rule is 

also unnecessary, as proposed Rule 2120(d)(5) 

allows the Exchange to restrict visiting on the 

Trading Floor in any manner at any time regardless 

of the size of the visiting group. As such, the 

Exchange believes that not including Arca Rules 

6.2(e)(4) and (7) is reasonable and in line with the 

proposed rules discussed herein. 

12See PHLX Rule 60(b)(i). The Exchange notes 

that there are no substantive differences between 

proposed Rule 2120(e)(1) and 60(b)(i). 

in any form, any kind of tobacco use, or 

any expectorating on the Trading Floor, 

is prohibited; 7 (iii) Running on the 

Trading Floor, which shall mean any 

movement at a degree of speed which 

may disrupt other occupants of the 

Trading Floor, is prohibited; (iv) 

Standing on chairs, furniture, booths, 

ladders, stools and similar items is 

prohibited; and (v) No object of any 

kind may be placed in the Pit if it could 

obstruct the flow of people in or out of 

the Pit. This includes all chairs, stools 

or other furniture. The Exchange notes 

that these proposed provisions are based 

on the rules of Arca.8

Next, the Exchange proposes Rule 

2120(c)(1) which governs Trading Floor 

Badges, Admission By Badge Only. 

Specifically, the Exchange proposes that 

admission to the Trading Floor will be 

by badge only except in the case of 

certain designated Options Exchange 

Officials. While on the Trading Floor, 

all persons must at all times display 

appropriate badges. All Trading Floor 

employees seeking admission to the 

Trading Floor without a badge must be 

identified by the Options Exchange 

Official or representative thereof and 

supplied with a temporary badge. NonFloor Participant employees of Floor 

Participants seeking admission without 

a badge must be identified by a Floor 

Participant and supplied with a 

temporary badge, and the Floor 

Participant may be subject to a fine in 

the event of continual failure of its 

employees to have appropriate badges. 

The Exchange notes that this proposed 

rule is based on the rules of Arca.9

The Exchange then proposes Rule 

2120(c)(2) which governs the 

Withdrawal of Trading Floor Badges. 

Specifically, the Exchange proposes that 

in the event that any Floor Participant’s 

Letter of Guarantee is revoked by a 

Clearing Participant in accordance with 

the procedures stated in Rule 8070, such 

Floor Participant will not be entitled to 

enter into transactions on the Trading 

Floor until and unless a new Letter of 

Guarantee has been issued to such Floor 

Participant by a Clearing Participant. 

Accordingly, the Exchange will 

withdraw promptly the Trading Floor 

badge of any Floor Participant whose 

Letter of Guarantee has been properly 

revoked, and will retain such badge 

under its control until the Floor 

Participant is subsequently covered by a 

Letter of Guarantee. A Floor Participant 

whose badge has been withdrawn under 

this Rule may, so long as his Floor 

Participant status continues, gain access 

to the Trading Floor by means of his 

Floor Participant identification pass, but 

may not enter into any transactions 

thereon. The Exchange notes that this 

proposed rule is based on the rules of 

Arca.10

Next, the Exchange proposes Rule 

2120(d) which details the rules and 

regulations regarding visitors on the 

Trading Floor. Specifically, the 

Exchange proposes that (1) Visitors 

must be the invited guests of a Floor 

Participant or of certain designated 

members of the Exchange staff. Other 

non-Floor Participant employees are not 

permitted to invite visitors to the 

Trading Floor; (2) Visitors must be 

signed in by the inviting Floor 

Participant or staff personnel, and wear 

a visitors badge at all times when on the 

Trading Floor. The inviting Floor 

Participant will be responsible for the 

visitor’s conduct on the Trading Floor 

and for the return of badges and must 

accompany such visitors at all times 

while they are on the Trading Floor; (3) 

Visitors may not enter the Crowd Area, 

block passageways, or otherwise disrupt 

or impair activity on the Trading Floor; 

(4) Persons associated with Floor 

Participants may visit the Floor only 

upon an invitation under the terms of 

subsection (1), above; (5) The Exchange 

may restrict visiting on the Trading 

Floor in any manner at any time when 

the Exchange deems that the presence of 

some or all visitors may interfere with 

orderly Trading Floor procedures. The 

Exchange notes that this rule is based on 

the rules of Arca.11

Next, the Exchange proposes Rule 

2120(e) which details Exclusion from 

the Trading Floor. Specifically, the 

Exchange proposes Rule 2120(e)(1) 

which states that an Options Exchange 

Official or an officer of the Exchange 

may exclude a Participant and any 

associated person of the Participant 

from the Trading Floor for breaches of 

regulations that relate to administration 

of order, decorum, health, safety and 

welfare on the Exchange that occurred 

on the Trading Floor or on the premises 

immediately adjacent to the Trading 

Floor. Specifically, Participants shall be 

excluded if they pose an immediate 

threat to the safety of persons or 

property, are seriously disrupting 

Exchange operations, or are in 

possession of a firearm. Participants so 

excluded may be excluded for a period 

of up to five business days. The 

Exchange notes that this rule is based on 

the rules of PHLX.12

Additionally, the Exchange proposes 

Rule 2120(e)(2). Specifically, the 

Exchange proposes that if a Participant 

shall be excluded for a period exceeding 

forty-eight (48) hours, an expedited 

hearing (‘‘Expedited Hearing’’) will be 

held before the Chair of the Hearing 

Committee or his or her designee 

(‘‘Expedited Hearing Officer’’) within 

forty-eight (48) business hours after the 

Participant’s exclusion from the Trading 

Floor. Written notice will be provided to 

the Participant of the date, time and 

place of the hearing. The Participant 

may be represented by counsel. The 

Expedited Hearing Officer shall conduct 

an Expedited Hearing. The Expedited 

Hearing Officer shall allow both the 

Participant or his or her representative 

and Exchange staff to present 

arguments. The Expedited Hearing 

Officer shall make a determination of 

whether to continue the Participant’s 

exclusion from the Trading Floor for a 

period of up to five (5) business days. 

The determination shall be based on the 

severity of the threat posed to persons 

on the Trading Floor, the disruptiveness 

caused by the actor and the safety and 

welfare of persons on the Trading Floor. 


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13See PHLX Rule 60(c). The Exchange notes that 

there is a minor difference between proposed Rule 

2120(e)(2) and PHLX Rule 60(c). Specifically, the 

Exchange did not include references to the 

‘‘Business Conduct Committee,’’ as such committee 

does not exist on BOX. The Exchange instead 

proposes that the Expedited Hearing will be held 

before the Chair of the Hearing Committee or his or 

her designee. The Exchange believes that this 

change is appropriate as this change better aligns 

the rule with BOX’s disciplinary rules. 

14See PHLX Rule 60(c)(iv). The Exchange notes 

that there are no substantive differences between 

proposed Rule 2120(e)(3) and PHLX Rule 60(c)(iv). 

15The Exchange notes that a clerical employee is 

not considered an ‘‘associated person’’ under the 

Exchange Act, and therefore no report shall be 

made if a clerical employee is in violation of rules 

and regulations relating to order, decorum, health, 

safety and welfare or administration of the 

Exchange. See 15 U.S.C. 78c(a)(18). 

16See PHLX Rule 60 Commentary (b). The 

Exchange notes that there are no substantive 

differences between proposed Rule 2120(e)(4) and 

PHLX Rule 60 Commentary (b). 

The Expedited Hearing Officer shall 

make a ruling at the time of the hearing 

and a written decision will be provided 

to the Participant following the hearing. 

Participants shall not be excluded from 

electronic trading, but will not be 

permitted to be physically present on 

the Trading Floor for the duration of any 

exclusion. The Exchange notes that this 

rule is based on the rules of PHLX .13

Further, the Exchange proposes Rule 

2120(e)(3) which states that exclusion 

from the Trading Floor may not be the 

exclusive sanction for breaches of this 

Rule and the regulations thereunder. In 

addition to exclusion, a Participant may 

also be subject to a fine or the matter 

may be referred to the Hearing 

Committee where it shall proceed in 

accordance with the Rule 12000 Series. 

The Exchange notes that this rule is 

based on the rules of PHLX. 14

Lastly, the Exchange proposes the 

procedure to be followed when a 

Participant is to be excluded from the 

Trading Floor. Specifically, the 

Exchange proposes that there is no 

further right of appeal. The 

determination that a Participant shall be 

excluded is final. There is no appeal 

from such determination. Further, the 

Exchange proposes that a report in 

appropriate form shall be made to the 

SEC. However, no report shall be made 

in a case where a clerical employee is 

excluded for a breach of regulations 

relating to order, decorum, health, safety 

and welfare or administration of the 

Exchange.15 The Exchange notes that 

this rule is based on the rules of 

PHLX.16

Imposition of Fines for Minor Rule 

Violations 

Exchange Rule 12140 provides that in 

lieu of commencing a disciplinary 

proceeding, the Exchange may, subject 

to the certain requirements set forth in 

the Rule, impose a fine, not to exceed 

$5,000, on any Options Participant, or 

person associated with or employed by 

an Options Participant, with respect to 

any Rule violation listed in Rule 

12140(d) and proposed (e) discussed 

below. Any fine imposed pursuant to 

this Rule that (i) does not exceed $2,500 

and (ii) is not contested, shall be 

reported on a periodic basis, except as 

may otherwise be required by Rule 19d– 

1 under the Act or by any other 

regulatory authority. Further, the Rule 

provides that any person against whom 

a fine is imposed under the Rule shall 

be served with a written statement 

setting forth (i) the Rule(s) allegedly 

violated; (ii) the act or omission 

constituting each such violation; (iii) the 

fine imposed for each violation; and (iv) 

the date by which such determination 

becomes final and such fine must be 

paid or contested, which date shall be 

not less than twenty-five (25) calendar 

days after the date of service of such 

written statement. The Exchange now 

proposes to reword the last sentence of 

Rule 12140(a). Specifically, the 

Exchange proposes to state that the 

Exchange will proceed under this Rule 

only for violations that are minor in 

nature. Any other violation will be 

addressed pursuant to Rule 12030 or 

12040. 

Next, the Exchange proposes to 

amend Rule 12140 to adopt section (e) 

which details Trading Floor Violations 

Subject to Fines and their applicable 

sanctions. 

First, the Exchange proposes to adopt 

12140(e)(1), General Responsibilities of 

Floor Brokers pursuant to BOX Rule 

7570. Under this rule, a Floor Broker 

who, when handling an order, fails to 

use due diligence to cause the order to 

be executed at the best price or prices 

available to him in accordance with the 

Rules of the Exchange shall be subject 

to the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $500. 

Second Occurrence .. $1,000. 

Third Occurrence ...... $2,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

Next, the Exchange proposes to adopt 

12140(e)(2), Failure to Properly Record 

Orders pursuant to BOX Rule 7580(e). 

Under this rule, any Floor Participant 

who fails to comply with the order 

format and system entry requirements 

on the Trading Floor shall be subject to 

the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $500. 

Second Occurrence .. $1,000. 

Third Occurrence ...... $2,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange then proposes to adopt 

12140(e)(3), Failure to Properly Execute 

a QOO Order, pursuant to BOX Rule 

7600. Under this rule, any Floor 

Participant who fails to properly 

execute a QOO Order shall be subject to 

the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $500. 

Second Occurrence .. $1,000. 

Third Occurrence ...... $2,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange proposes to adopt 

12140(e)(4), Trading Conduct and Order 

& Decorum on the Trading Floor, 

pursuant to proposed Rule 2120(b)–(d) 

discussed above. Under this rule, 

violations of Rule 2120 related to 

Trading Floor Conduct and decorum 

shall be subject to the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $250. 

Second Occurrence .. $500. 

Third Occurrence ...... $1,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange then proposes to adopt 

12140(e)(5), Discretionary Transactions. 

Under this rule, violations of Rule 7590 

regarding Discretionary Transactions 

shall be subject to the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $250. 

Second Occurrence .. $500. 

Third Occurrence ...... $1,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

Next, the Exchange proposes to adopt 

Rule 12140(e)(6), Floor Participant Not 

Available to Reconcile an Uncompared 

Trade pursuant to Rule 8530. Under this 

proposed rule, violations of Rule 8530 

regarding the resolution of uncompared 

trades shall be subject to the following 

fines: 


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17See Arca Rule 10.12(k). The Exchange notes 

that it did not adopt all of Arca’s Minor Rule Plan 

violations and sanctions, as some rules were not 

applicable to BOX. Specifically, BOX did not copy 

the following Arca Rules as they were not 

applicable because the corresponding rule does not 

exist on BOX. They are: 10.12(k)(i)(7), 

10.12(k)(i)(10), 10.12(k)(i)(11), 10.12(k)(i)(12), 

10.12(k)(i)(21), 10.12(k)(i)(22), 10.12(k)(i)(23), 

10.12(k)(i)(24), 10.12(k)(i)(25), 10.12(k)(i)(26), 

10.12(k)(i)(29), 10.12(k)(i)(30), 10.12(k)(i)(33), 

10.12(k)(i)(34), 10.12(k)(i)(37), 10.12(k)(i)(38), 

10.12(k)(i)(44) and 10.12(k)(i)(45). Because these 

rules do not exist on BOX, there cannot be a 

corresponding MRVP fine under proposed Rule 

12140(e). Next, the Exchange did not copy the 

following Arca Rules, as BOX believes they are 

covered under other proposed BOX MRVP rules. 

They are: 10.12(k)(i)(3) covered under proposed 

Rule 12140(e)(3), 10.12(k)(i)(6) covered under 

proposed Rule 12140(e)(9), 10.12(k)(i)(13) covered 

under proposed Rule 12140(e)(7), 10.12(k)(i)(17) 

covered under proposed Rule 12140(e)(4), 

10.12(k)(i)(19) covered under proposed Rule 

12140(e)(4), 10.12(k)(i)(27) covered under proposed 

Rule 12140(e)(7), 10.12(k)(i)(31) covered under 

proposed Rule 12140(e)(4), 10.12(k)(i)(32) covered 

under proposed Rule 12140(e)(4), 10.12(k)(i)(35) 

covered under Rule 12140(d)(10)(the Exchange 

notes that this is an existing Rule found in the BOX 

MRVP and is also applicable to the Trading Floor), 

10.12(k)(i)(36) covered under proposed Rule 

12140(e)(4) and 10.12(k)(i)(39) covered under 

proposed Rule 12140(e)(9). Further, the Exchange 

did not copy Arca Rule 10.21(k)(i)(42) because the 

Exchange believes that the inclusion of this rule is 

unnecessary given the unique nature of the BOX 

Trading Floor. Specifically, the Trading Floor relies 

heavily on the technology used to submit QOO 

orders for execution. Because the technology will 

not allow orders to be submitted before or after 

trading hours, the Exchange believes that the 

inclusion of this rule is unnecessary. Lastly, the 

Exchange notes that the proposed sanctions are 

lower when compared to Arca. The Exchange 

believes the proposed sanction amounts are 

appropriate as they are in line with BOX’s current 

MRVP sanctions. 

18 15 U.S.C. 78f(b). 

19 15 U.S.C. 78f(b)(5). 

20See supra notes 5, 6, 8, 9, 10, 11, 12, 13, 14 

and 16. 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $500. 

Second Occurrence .. $1,000. 

Third Occurrence ...... $2,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange then proposes to adopt 

Rule 12140(e)(7), Floor Participant 

Communications and Equipment, 

pursuant to Rule 7660. Under this 

proposed rule, violations of Rule 7660 

regarding Floor Participant 

Communications and Equipment shall 

be subject to the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $250. 

Second Occurrence .. $500. 

Third Occurrence ...... $1,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

Next, the Exchange proposes Rule 

12140(e)(8), Improper Vocalization of a 

Trade pursuant to Rule 100(b)(5). Under 

this proposed rule, violations of Rule 

100(b)(5) regarding the requirements for 

public outcry shall be subject to the 

following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $250. 

Second Occurrence .. $500. 

Third Occurrence ...... $1,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange then proposes to adopt 

Rule 12140(e)(9), Floor Market Maker 

Failure to Comply with Quotation 

Requirements pursuant to Rule 

8510(c)(2). Under this rule, violations of 

Rule 8510(c)(2) regarding a Floor Market 

Maker’s Obligations of Continuous 

Open Outcry Quoting shall be subject to 

the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $250. 

Second Occurrence .. $500. 

Third Occurrence ...... $1,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange proposes Rule 

12140(e)(10), Floor Market Maker Quote 

Spread Parameters pursuant to Rule 

8510(d)(1). Under this proposed rule, 

violations of Rule 8510(d)(1) regarding 

legal bid/ask differential requirements 

on the Trading Floor shall be subject to 

the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... Letter of Caution. 

Second Occurrence .. $250. 

Third Occurrence ...... $500. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

Next, the Exchange proposes Rule 

12140(e)(11), Floor Broker Failure to 

Honor the Priority of Bids and Offers 

pursuant to Rule 7610(d). Under this 

proposed rule, violations of Rule 

7610(d) regarding a Floor Broker’s 

obligations in determining Time Priority 

Sequence shall be subject to the 

following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $500. 

Second Occurrence .. $1,000. 

Third Occurrence ...... $2,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange then proposes Rule 

12140(e)(12), Floor Broker Failure to 

Identify a Broker Dealer Order, pursuant 

to Rule IM–7580–2. Under this 

proposed rule, violations of Rule IM– 

7580–2 regarding a Floor Broker’s 

responsibility to identify its orders shall 

be subject to the following fines: 

Number of violations 

within any rolling 24- 

month period 

Sanction 

First Occurrence ....... $250. 

Second Occurrence .. $500. 

Third Occurrence ...... $1,000. 

Subsequent Occurrences.Formal Disciplinary 

Action. 

The Exchange notes that the proposed 

violations listed above are substantially 

similar to the rules of NYSE Arca’s 

Minor Rule Plan regarding violations 

and sanctions applicable to a physical 

trading floor.17

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the 

Act,18 in general, and Section 6(b)(5) of 

the Act,19 in particular, in that it is 

designed to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism for a free 

and open market and a national market 

system and, in general, to protect 

investors and the public interest. 

Proposed Rule 2120 

The Exchange believes that proposed 

Rule 2120, Trading Conduct and Order 

and Decorum on the Trading Floor, 

imposes reasonable restrictions and 

requirements that are designed to 

further the objectives of the Act. 

Specifically, the proposed rules are 

designed to maintain order on the 

Trading Floor and apply to all Floor 

Participants. Additionally, these rules 

are based on those of competing options 

exchanges that also have trading 

floors.20

Imposition of Fines for Minor Rule 

Violations 

The Exchange believes that the 

proposed changes to Rule 12140 are 

consistent with and further the 


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39634 Federal Register / Vol. 82, No. 160 / Monday, August 21, 2017 / Notices 

21 15 U.S.C. 78f(b)(6). 

22 15 U.S.C. 78f(b)(7) and (d)(1). 

23See supra note 17. 

24See supra notes 5, 6, 8, 9, 10, 11, 12, 13, 14, 

16 and 17. 

25 15 U.S.C. 78s(b)(3)(A)(iii). 

26 17 CFR 240.19b–4(f)(6). 

27For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

28 15 U.S.C. 78s(b)(2)(B). 

objectives of the Act. Additionally, the 

Exchange believes that the proposal is 

consistent with Section 6(b)(6) of the 

Act 21 which requires the rules of an 

exchange provide that its members be 

appropriately disciplined for violations 

of the Act as well as the rules and 

regulations thereunder, by imposing 

pre-set fine amounts for breaches of 

order and decorum to reflect the 

severity of the violation and provide an 

appropriate form of deterrence for 

violations of Exchange Rules and the 

regulations thereunder. In addition, 

because existing BOX Rule 12140 

provides procedural rights to a person 

fined under the Exchange’s MRVP to 

contest the fine and permits a hearing 

on the matter, the Exchange believes 

that the proposal is consistent with 

Sections 6(b)(7) and 6(d)(1) of the Act,22

because it provides a fair procedure for 

the disciplining of Participants and 

persons associated with Participants. 

The Exchange believes that the preset 

fines for Trading Floor violations are 

appropriate to deter Floor Participants 

from violating requirements and 

restrictions which are necessary for the 

orderly operation of the Trading Floor. 

The fines should create further 

deterrents for certain activity on the 

Trading Floor which disrupts the 

orderly operation of the Trading Floor. 

Further, the minor rule plan assists the 

regulatory staff in protecting its market 

to the benefit of the public. Finally, the 

Exchange believes that the proposal is 

consistent with the public interest, the 

protection of investors, or otherwise in 

furtherance of the purposes of the Act, 

because Rule 12140 strengthens the 

Exchange’s ability to carry out its 

oversight and enforcement 

responsibilities as an SRO in cases 

where full disciplinary proceedings may 

be unsuitable in view of the minor 

nature of the particular violation. 

Additionally, these rules are based on 

those of a competing options exchange 

[sic] that also has a trading floor.23

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. In this regard 

and as indicated above, the Exchange 

notes that the rule changes being 

proposed are similar to the rules of Arca 

and PHLX.24 Further, the proposal 

relates to the Exchange’s role and 

responsibilities as a self-regulatory 

organization and the manner in which 

it disciplines its Participants and 

associated persons for violations of its 

Rules. 

As such, the Exchange does not 

believe that the proposed rule change 

will impose any burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 25 and Rule 

19b–4(f)(6) thereunder.26 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative upon filing. The 

Exchange has stated that it is requesting 

this waiver because the disciplinary 

rules contained in this proposed rule 

change need to be in place for the 

Exchange to operate its recently 

approved Trading Floor and waiver of 

the operative delay will allow the 

Exchange to commence operation of the 

Trading Floor in a timely manner while 

ensuring that proper disciplinary rules 

are in place. The Exchange explained 

that the proposed rules are similar to the 

rules of other Exchanges and that it 

provided Participants on the Exchange 

with notice of the disciplinary rules 

contained in the proposed rule change 

via regulatory circular. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest because this waiver will enable 

the Exchange to begin operating its 

Trading Floor with trading conduct and 

order and decorum rules in place and 

with a Minor Rule Violation Plan that 

incorporates violations concerning 

activities related to the Trading Floor. 

The Commission further notes that the 

proposed rules are based on the rules of 

other exchanges with trading floors. For 

this reason, the Commission hereby 

waives the 30-day operative delay 

requirement and designates the 

proposed rule change as operative upon 

filing.27

At any time within 60 days of the 

filing of such 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 28 of the Act to 

determine whether the proposed rule 

change 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–2017–26 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BOX–2017–26. 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 


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Federal Register / Vol. 82, No. 160 / Monday, August 21, 2017 / Notices 39635 

29 17 CFR 200.30–3(a)(12). 

1Applicants request that the order apply to the 

applicants and to any existing or future registered 

open-end or closed-end management investment 

company or series thereof for which TA or TCIM 

or any successor thereto or an investment adviser 

controlling, controlled by, or under common 

control with TA or TCIM or any successor thereto 

serves as investment adviser (each a ‘‘Fund’’ and 

collectively the ‘‘Funds’’ and each such investment 

adviser an ‘‘Adviser’’). For purposes of the 

requested order, ‘‘successor’’ is limited to any entity 

that results from a reorganization into another 

jurisdiction or a change in the type of a business 

organization. The term ‘‘Adviser’’ does not include 

Nuveen Fund Advisors, LLC, and the term ‘‘Funds’’ 

does not include any registered investment 

companies for which Nuveen Fund Advisors, LLC 

serves as investment adviser. The Funds that are 

closed-end management investment companies will 

not participate as borrowers in the interfund 

lending facility. 

2Any Fund, however, will be able to call a loan 

on one business day’s notice. 

3Under certain circumstances, a borrowing Fund 

will be required to pledge collateral to secure the 

loan. 

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 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– 

2017–26, and should be submitted on or 

before September 11, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–17545 Filed 8–18–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

32779; File No. 812–14723] 

TIAA–CREF Funds, et al. 

August 15, 2017. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application for an order 

pursuant to: (a) Section 6(c) of the 

Investment Company Act of 1940 

(‘‘Act’’) granting an exemption from 

sections 18(f) and 21(b) of the Act; (b) 

section 12(d)(1)(J) of the Act granting an 

exemption from section 12(d)(1) of the 

Act; (c) sections 6(c) and 17(b) of the 

Act granting an exemption from sections 

17(a)(1), 17(a)(2) and 17(a)(3) of the Act; 

and (d) section 17(d) of the Act and rule 

17d–1 under the Act to permit certain 

joint arrangements and transactions. 

Applicants request an order that would 

permit certain registered open-end 

management investment companies to 

participate in a joint lending and 

borrowing facility. 

Applicants: TIAA–CREF Funds, 

TIAA–CREF Life Funds, College 

Retirement Equities Fund and TIAA 

Separate Account VA–1, each registered 

under the Act as an open-end 

management investment company with 

one or more series or accounts, and 

Teachers Advisors, LLC (‘‘TA’’) and 

TIAA–CREF Investment Management, 

LLC (‘‘TCIM’’), each registered as an 

investment adviser under the 

Investment Advisers Act of 1940. 

Filing Dates: The application was 

filed on December 8, 2016 and amended 

on April 13, 2017 and July 11, 2017. 

Hearing or Notification of Hearing: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. 

Hearing requests should be received 

by the Commission by 5:30 p.m. on 

September 11, 2017 and should be 

accompanied by proof of service on the 

applicants, in the form of an affidavit, 

or, for lawyers, a certificate of service. 

Pursuant to Rule 0–5 under the Act, 

hearing requests should state the nature 

of the writer’s interest, any facts bearing 

upon the desirability of a hearing on the 

matter, the reason for the request, and 

the issues contested. Persons who wish 

to be notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090; 

Applicants: c/o Rachael Zufall, Nuveen, 

LLC, 8500 Andrew Carnegie Boulevard, 

Charlotte, NC 28262. 

FOR FURTHER INFORMATION CONTACT: Asaf 

Barouk, Attorney-Advisor, at (202) 551– 

4029, or Kaitlin Bottock, Branch Chief, 

at (202) 551–6821 (Division of 

Investment Management, Chief 

Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http://

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

calling (202) 551–8090. 

Summary of the Application 

1. Applicants request an order that 

would permit the applicants to 

participate in an interfund lending 

facility where each Fund could lend 

money directly to and borrow money 

directly from other Funds to cover 

unanticipated cash shortfalls, such as 

unanticipated redemptions or trade 

fails.1 The Funds will not borrow under 

the facility for leverage purposes and 

the loans’ duration will be no more than 

7 days.2

2. Applicants anticipate that the 

proposed facility would provide a 

borrowing Fund with a source of 

liquidity at a rate lower than the bank 

borrowing rate at times when the cash 

position of the Fund is insufficient to 

meet temporary cash requirements. In 

addition, Funds making short-term cash 

loans directly to other Funds would 

earn interest at a rate higher than they 

otherwise could obtain from investing 

their cash in repurchase agreements or 

certain other short term money market 

instruments. Thus, applicants assert that 

the facility would benefit both 

borrowing and lending Funds. 

3. Applicants agree that any order 

granting the requested relief will be 

subject to the terms and conditions 

stated in the application. Among others, 

an Adviser, through a designated 

committee, would administer the 

facility as a disinterested fiduciary as 

part of its duties under the investment 

management agreements with the Funds 

and would receive no additional fee as 

compensation for its services in 

connection with the administration of 

the facility. The facility would be 

subject to oversight and certain 

approvals by the Funds’ Board, 

including, among others, approval of the 

interest rate formula and of the method 

for allocating loans across Funds, as 

well as review of the process in place to 

evaluate the liquidity implications for 

the Funds. A Fund’s aggregate 

outstanding interfund loans will not 

exceed 15% of its net assets, and the 

Fund’s loans to any one Fund will not 

exceed 5% of the lending Fund’s net 

assets.3


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